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...

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 default-risk premium and

thus no demand shock.” Do you agree with this

statement? Briefly explain.