A country's two largest commercial banks, which make-up 70 percent of the country's commercial banking system, have each issued hundreds of thousands of 30 year loans to homeowners at an interest rate of 3 percent per year. Recently, the government has begun implementing an aggressive expansionary policy to encourage real economic growth. As a result of these actions, prices rise sharply and the inflation increases from 1 percent to 5 percent, which means the commercial banks' real interest rate on the 30-year loans fell from 2 percent to -2 percent. If the government does not step in and bail the banks out, the banks will go under. In your opinion, should the government step in and bail the banks out? Yes. The country's banking system would crumble if 70 percent of its commercial banks went under. No. The banks knew the lending risks and should have accounted for the possibility of unexpected inflation. O Yes. The government's expansionary policies put the banks in this situation and the government needs to step in and bail them out. No. A government bail out really means the hardworking taxpayers are paying for the bail out. The taxpayers did not do anything wrong and should not be harmed because the banks made bad loans