If the federal government had not bailed out the large financial institutions during the financial crisis of 2008-2009, the negative wealth effect would likely have been larger.

Question

Quizplus · Accepted Answer

If the large financial institutions had not been bailed out, it is likely that they would have collapsed, causing widespread panic and possibly irreparable damage to the economy. This would have led to a larger negative wealth effect, as people's investments and savings would have been greatly impacted by the financial turmoil.

If the Federal Government Had Not Bailed Out the Large