Why is responding to a financial crisis by bailing out financial institutions more effective than direct support of nonfinancial businesses?
What will be an ideal response?
In the wake of a financial crisis, many businesses find it difficult to cover operating expenses and would welcome direct financial support. However, business subsidies or tax credits and measures to stimulate demand address only the symptoms of the economic downturn. Direct aid to businesses may allow them to survive, but does not bring the economy beyond the crisis. The underlying problem is the inability of financial institutions to identify productive opportunities worthy of financial support. The value of financial assets and, especially, the viability of surviving financial institutions must be clarified to bring the crisis to an end.
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There are ________ between the risks individuals expose one another to and the risks corporations expose their customers to
A) major differences B) no fundamental differences C) only financial differences D) significant, but relatively minor differences
In order to continue its operations, in the long-run a firm must
a. Charge a price that is equal to its AVC b. Charge a price that is equal to its AFC c. Charge a price that is equal to its AVC + AFC d. Need more information to determine the price
Which of the following policies is the government most inclined to use when faced with a positive externality?
a. taxation b. permits c. subsidies d. usage fees
Which goes exclusively to the poor?
A. Medicaid B. Medicare C. Social Security D. Unemployment insurance benefits