The solution to the recent financial crisis is
A) better financial disclosure and adequate regulatory supervision of credit markets.
B) higher borrowing costs for riskier firms.
C) higher interest rates to discourage risky borrowing.
D) expansionary fiscal policy.
E) government extending credit to consumers and firms.

Question

Quizplus · Accepted Answer

The recent financial crisis was largely caused by inadequate financial disclosure and regulatory supervision of credit markets. Therefore, the best solution would be to improve these areas to prevent future crises. The other options (B, C, D, E) may address certain symptoms of the crisis, but they do not address the root cause.

The Solution to the Recent Financial Crisis Is