Economics (AS & A Level) · May / June 2024 · Paper 31 · Question 16
A world financial crisis was partly linked to the actions of commercial banks. Which actions of the commercial banks could have led to the financial crisis?
- Abeing subject to tight controls by the central bank over credit creation
- Bholding reserves above the reserve ratio agreed with the central bank
- Ctaking excessive risks by demanding insufficient security from borrowers
- Dwidening the gap in favour of a bank's assets over liabilities
As printed in the paper
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Correct answer: C. taking excessive risks by demanding insufficient security from borrowers
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