9. In a speech in 2009, Ben Bernanke, then chair of the Federal Reserve, concluded:

In the wake of the ongoing financial crisis, governments have moved quickly to establish a wide range of programs to support financial market functioning and foster credit flows to businesses and households. However, these necessary short-term steps must be accompanied by new policies to limit the incidence and impact of systemic risk.12

a. What is meant by systemic risk?

b. Why does systemic risk impede the flow of credit available to businesses and households?

c. Why is government intervention needed to reduce systemic risk rather than relying solely on individual market participants to do so without intervention?