Which one of the following statements regarding financial and economic crises is NOT correct? Which one of the following statements regarding financial and economic crises is NOT correct? Nominal variables are more sluggish. Governments' promises of bail-outs may cause moral hazard problems in the banking sector. It usually takes longer for an economy to recover from an economic recession compared to financial crises. Deposit insurance can effectively prevent bank runs.
Question
Which one of the following statements regarding financial and economic crises is NOT correct?
Which one of the following statements regarding financial and economic crises is NOT correct?
Nominal variables are more sluggish.
Governments' promises of bail-outs may cause moral hazard problems in the banking sector.
It usually takes longer for an economy to recover from an economic recession compared to financial crises.
Deposit insurance can effectively prevent bank runs.
Solution
The statement that is NOT correct is: "It usually takes longer for an economy to recover from an economic recession compared to financial crises."
This statement is incorrect because the recovery time from financial crises and economic recessions can vary greatly depending on the severity and nature of the crisis or recession. In many cases, financial crises can lead to economic recessions, and the recovery from such crises can take a very long time. For example, the 2008 financial crisis led to a global recession from which many economies took several years to recover.
Similar Questions
create questions about financial crisis, from an economic perspective
For banking, despite being one of the most regulated sectors, financial and banking crises occur every few years.Why do you think that is?
What are the causes of financial crisis?
If uncertainty about banks' health causes depositors to begin to withdraw their funds frombanks, the country experiences a(n)A) banking crisis.B) financial recovery.C) reduction of the adverse selection and moral hazard problems.D) increase in information available to investors.
Which of the following is a characteristic of a well-functioning financial system?Question 4AnswerA.High inflation ratesB.Low interest ratesC.Financial stability and efficiencyD.Market distortions
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.