43. Falure, or near failure, of the fnance sedtor charactersences tand tankn fac

Question

43. Falure, or near failure, of the fnance sedtor charactersences tand tankn factors aiso descrbe a post-finanoiaf crisis om show a.) Mal-investments undertaken in bust capital money and capital markets are greatly reduced in size. the volume Business formation (direct investment) and job creation are greatly curtaied bor oocurs on a large scale, as a resut. The social division of iabor b.) Individual of loans and the number and amount of secutizations greatly reduce d.)All of the above 44 Atit Mian and Amir Sufi in theie 2014 book, House of Debt: How They (and Yow aused the Great Recession, and How We Can Prevent it from Happening Again (University of Chicago Press), present a) the banking view of the Great Recession, the breakdown of financial rrnediation, as the key eulprit in the 2007-2009 financial crisis cause of the 2007-2009 fnancial crisit the key culprit of the crisis rather than faing banks. Excessive mortgage lending inflated bubbles in the housing market and then left households with unmanageable debt burdens. Spending tel much more in parts of the country where house prices fell the fastest and where mortgage debt was attached to houses of c.) the perspective that the real source of the 2007-2009 financial crisis (and of the credit crunch which followed) was the implosion of the shadow baniking world rather than a collapse of bank loans d.) Is the view that government is the key culprit in the 2007-2000 financial crisis because it was the biggest source of outstanding home mongage and consumer credit loans in the United States long before and during the 2007- 2009 period. Indeed, this is true of government even today (December 2018). 45. Define what is meant by the term "macro-prudential policy." a.) Involves using the regulation of banks and other financial institutions to head off boom-to-bust cycles in finance, e.g., focusing on over-exuberant housing markets by imposing limits on large mortgages or imposing ceilings on the amount of debt a borrower can take on relative to incomes or home values or it could vary a limit on banks' overall indebtedness-the so-called leverage ratio-in an attempt to act against excessive lending. b.) Macro-prudential policy oversees the systemic fragility of the financial system. It may have a narrow goal such as ensuring banks are strong enough to weather economic storms or may have a wider agenda of curbing fluctuations in the broader credit cycle c.) Regulators additionally can adjust the so-called countercyclical capital buffer, which is part of the Basel Il regime and sets capital held against lenders' assets, can also change risk weights for lending to particular asset types, e.g, residential mortgages or commercial property, in order to build- up resilience, and supervisors could attempt to reduce banks' exposure to liquidity crises, eg., by reducing reliance on short-term funding. d.) All of the above.

Explanation / Answer

Answer 45

All the options define macro Prudential policy.

Answer 50

Energy market auctions that is option B

Answer

An iterative process and aptly described as fractional reserve banking and redeposits

Hence option B

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