Question 1

The European Financial Stability Facility (EFSF)has a mandate to safeguard financial stability in Europe by providing financial assistance to euro area Member States.

Accepted Answer

The statement accurately describes the mandate of the European Financial Stability Facility (EFSF), which was established in 2010 to provide financial assistance to euro area Member States in order to safeguard financial stability in Europe.

Question 2

The authors conclude the chapter with a specific road map for future financial regulation.

Accepted Answer

The statement is too specific and without context, it cannot be determined if the authors concluded the chapter with a specific road map for future financial regulation.

Question 3

The members of the EU's eurozone (euro participants)do NOT have the ability to conduct independent monetary policy.

Accepted Answer

The members of the eurozone have relinquished their ability to conduct independent monetary policy and instead follow the guidelines set by the European Central Bank (ECB). The ECB sets monetary policy for all countries in the eurozone in order to maintain stability and promote economic growth.

Question 4

Ireland and Greece had the same issues lead to their financial crises in 2009. In each case, the previous government had dramatically understated the size of their federal budget deficit as a percentage of GDP.

Accepted Answer

Ireland's crisis was primarily due to a banking collapse and property bubble, while Greece's crisis was due to government debt and fiscal mismanagement, including understating budget deficits.

Question 5

Securitization is likely to be declared illegal in the U.S. though it may still exist elsewhere in the world.

Accepted Answer

Comment: Securitization is here to stay in the U.S. and around the world.

Question 6

Baring the (hopefully temporary setback of 2008)capital is more mobile today than ever before.

Accepted Answer

Due to advancements in technology and globalization, capital can be easily transferred across borders and invested in different countries. However, the 2008 financial crisis did have a temporary impact on the mobility of capital, as investors became more risk-averse and government regulations were put in place to prevent future crises.

Question 7

Every EU member nation has the right to simply print more euros.

Accepted Answer

Each EU member nation is prohibited by the Treaty on the Functioning of the European Union (TFEU) from unilaterally printing more euros. Only the European Central Bank (ECB) has the authority to issue new euro banknotes and oversee the eurozone monetary policy.

Quiz 5: The Continuing Global Financial Crisis