Using information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.
a. The loss in output that resulted from the financial crisis is many times larger than the losses on mortgages held by U.S. financial institutions.
b. An increase in a bank's leverage ratio tends to increase both the expected profit of the bank and the risk of the bank going bankrupt.
c. The high degree of securitization in the U.S. financial sys- tem helped to diversify risk and probably lessened the economic effect of the fall in housing prices.
d. Since the financial crisis ultimately led to a global reces- sion, the policy measures (adopted in many countries) that provided substantial liquidity to financial institutions and that recapitalized banks (through the purchase of shares by governments) failed.
e. The fiscal stimulus programs adopted by many countries in response to the financial crisis helped offset the decline in aggregate demand and reduce the size of the recession.
f. The fiscal stimulus program adopted by many countries in response to the financial crisis did not lead to a large in- crease in the debt-to-GDP ratio.
g. Fiscal and monetary policy successfully saved Japan from a decade of slow growth following its financial crisis in the early 1990s.