Exam 29: Crises and Consequences

In a recession, the Fed usually purchases short-term government securities to decrease interest rates and increase spending.

A credit crunch causes a recession because:

Following a severe banking crisis, unemployment usually begins to decrease in a few months.

After a banking crisis, when the Federal Reserve buys government securities to increase the money supply and decrease interest rates:

Subprime mortgages:

The primary cause of the Spanish recession following the 2008 financial crisis was a:

Describe the financial contagion that occurred during the Irish banking crisis in 2008.

A bank run can result in bank failure because banks keep only a small fraction of their depositors' funds in the bank vault and are therefore unable to meet their customers' demands for their money.

Ireland's rapid growth came to a halt in 2008 because:

Without banks, people would:

Consumers and businesses with debt overhang are likely to _____ their borrowing and _____ their spending.

Which of the following countries was known as the Celtic Tiger during much of the 1990s and 2000s?

Loans to home buyers who do not qualify for a standard mortgage are called _____ mortgages.

Shadow banks are not subject to runs.

If the government guarantees liabilities of financial institutions other than deposits:

Before the financial crisis in 2008 shadow banks:

In a vicious cycle of deleveraging:

A repo is a:

The effect of the harsh budget cuts required by the European countries who made emergency loans to Greece in 2011 was:

Banking crises are: