According to the Financial Instability Hypothesis, When Government Intervenes to Break

Multiple Choice

According to the financial instability hypothesis, when government intervenes to break a downturn

A) The economy returns to a financially stable position.
B) Spending units do not reduce their leveraging and the economy remains financially fragile.
C) the knowledge that the government will do so may create banks to take on more risks.
D) Both b and c are correct.