Chapter 7

Financial Crises 

Quizzes 

Test your knowledge with the Chapter 7 quiz! 

Question 1

The U.S. Glass-Steagall Act:

Separated banking from investment activities

Controlled interest rates for banks

Eliminated offshore trading

Created flexible deposit systems in banks

None

Question 2

Structural adjustment loans:

Seek to change the fundamental nature of the borrowing economy

Work to reduce lenders’ exposure

Push for fiscal responsibility

Promote government regulation

None

Question 3

Financial contagion occurs when:

a country loses its export competitiveness

key banks in a countrygo bankrupt

real estate markets implode

the run on a currency in one country spills over into another’s

None

Question 4

Debt agreements seek to defer payments.

Question 5

The ratio compares a country’s debt payments to its exports.

Question 6

Those who promote austerity are most concerned about .

Question 7

‘ ‘ refers to the situation where the size of a few banks means if one fails, it will create cascading effects through the economy.

Question 8

Liberals place most of the blame for the 1980s debt crisis on lenders.

TRUE

FALSE

None

Question 9

During the Great Moderation, there was a relaxation of concerns about the business cycle.

TRUE

FALSE

None

Question 10

The Asian Financial Crisis began in Thailand.

TRUE

FALSE

None

Time’s up

Watch, Listen, Read, and Explore 

This content includes videos, podcasts, articles, readings, and other resources to help you understand and explore the content covered in the chapter. Most readings are freely available, although anything marked with an asterisk may require institutional log-in (e.g., through your university). Freely available data sources are also included to explore and further research. 

Videos 

• See Lecture Video
• Kenneth Rogoff, video lecture on debt issues: https://www.youtube.com/watch?v=LZdve-uKInk  
• Money, Power and Wall Street, video documentary series on the aftermath of the 2008 financial crisis: https://www.pbs.org/wgbh/frontline/documentary/money-power-wall-street/  
• Barry Eichengreen, lessons from the global financial crisis: https://www.youtube.com/watch?v=xrwO3rR_IjY  
• Asian Financial Crisis, DW documentary: https://www.youtube.com/watch?v=O2pD_y61jx4  
• The Pandora Papers, offshore finance, ABC News: https://www.youtube.com/watch?v=4kPLpZN3I3A  
• Barrow vs. Galbraith austerity vs. stimulus debate: https://www.youtube.com/watch?v=e1unqbGVBRY  

Podcasts 

• LSE, “10 Years after the Global Financial Crisis podcast”: https://www.lse.ac.uk/ideas/podcasts/ten-years-since-crisis  
• U. of Oxford podcast, Global Economic Governance: Globalisation and the Financial Crisis: https://podcasts.ox.ac.uk/series/global-economic-governance-globalisation-and-financial-crisis  

Readings 

• The Economist, History of Financial Crises, link dead https://www.economist.com/news/essays/21600451-finance-not-merely-prone-crises-it-shaped-them-five-historical-crises-show-how-aspects-today-s-fina  
• Lessons from banking crisis of the past, Economics observatory: https://www.economicsobservatory.com/what-can-we-learn-from-banking-crises-of-the-past  
• Council on Foreign Relations, Timeline of the 2008 financial crisis: https://www.cfr.org/timeline/us-financial-crisis  
• Global Debt Crisis and International Aid, (Rafael Romeu, CSIS, 2023): https://www.csis.org/analysis/emerging-global-debt-crisis-and-role-international-aid  
• “China’s Next Financial Crisis: A Matter of ‘When’ Not ‘If’” (Philippe Aguignier Institut Montaigne): https://www.institutmontaigne.org/en/expressions/chinas-next-financial-crisis-matter-when-not-if  
• Levy Institute, Austerity vs. Stimulus summary: https://www.levyinstitute.org/pubs/op_35.pdf  
• Financial Stability Board, Evaluation of Too-Big-To-Fail Reforms (2021): https://www.fsb.org/wp-content/uploads/P010421-1.pdf  
• European Parliament, discussion of Tobin Tax (1999): https://www.europarl.europa.eu/workingpapers/econ/107_en.htm  
• Breaking the circle of the Eurozone debt crisis (Paul de Grauwe, London School of Economics and Political Science): https://www.lse.ac.uk/Research/research-impact-case-studies/breaking-the-vicious-circle-of-the-eurozone-debt-crisis  
• The end of magical debt thinking (Rogoff, Project Syndicate, 2024): https://www.project-syndicate.org/commentary/developed-countries-public-borrowing-spree-bill-comes-due-by-kenneth-rogoff-2024-04  

Selected Sources of Free Data 

• IMF, global debt database: https://www.imf.org/external/datamapper/datasets/GDD  
• World Bank, debt statistics: https://www.worldbank.org/en/programs/debt-statistics  
• Institute of International Finance, Global Debt Monitor: https://www.iif.com/Products/Global-Debt-Monitor  
• UNCTAD, World of Debt report: https://unctad.org/publication/world-of-debt