An important lesson from the 2007-2009 financial crisis is that central banks and other regulators should have a laissez-faire attitude and let credit-driven bubbles proceed without any reaction. Intervention is always a mistake.

Question

Quizplus · Accepted Answer

This statement is false. The financial crisis of 2007-2009 was largely caused by a credit-driven bubble in the housing market, which was fueled by lax lending standards and an ease of access to credit. Central banks and other regulators failed to intervene and regulate the markets, which allowed the bubble to inflate to dangerous levels, ultimately resulting in a severe economic recession. The lesson learned from this crisis is that regulators must be proactive in preventing credit-driven bubbles and intervening when necessary to stabilize the markets.

An Important Lesson from the 2007-2009 Financial Crisis Is That