A. What lies in this loss of faith?

B. One cause is the feeling that an overly loose monetary policy got the economy into this mess.

C. Repeated cuts in interest rates during the last downturn, while in 2000-03, fuelled the

D. housing and credit bubbles that are now bursting to such damaging affect.

E. The legacies of that boom--falling asset prices, high consumer debt and bank losses--may now hamper the ability of central banks to prop the spending.

A & B

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B, C & E

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C & D

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B only

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Solution

The correct option is D
B only

Option: (D)
Statement A is incorrect due to the usage of the phrase "lies in this loss of faith”. This phrase does not make any sense. Statement C is wrong as it should be, "last downturn, in 2000-2003”. Statement D is incorrect as in should be "effect” and not "affect”. Statement E is wrong because the phrase "prop the spending” does not make sense. Hence only B is correct.

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