Question: Consider the following statement: The event that caused the recession of 20072009 was the failure of Lehman Brothers. If Lehman Brothers had not been allowed

Consider the following statement: “The event that caused the recession of 2007–2009 was the failure of Lehman Brothers. If Lehman Brothers had not been allowed to fail, there would have been no effect on the risk premium and thus no demand shock.” Do you agree with this statement? Briefly explain.

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