Practice question · Multiple choice
Why did the GFC not become a second Great Depression?
Hints
- The response applied lessons learned from the earlier collapse.
- Liquidity, deposit guarantees and spending were all deployed.
Show the answer
A. Depression-era lessons were applied
Why
The Fed flooded the system with liquidity, the FDIC guaranteed deposits, and governments spent to replace demand, all lessons learned from the 1930s failure to do exactly these things.
Practise The Global Financial Crisis
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More questions on The Global Financial Crisis
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- Sort each factor: did it cause the crisis or respond to it?
- Match each GFC concept to its meaning.