Loops may cause broadcast storms on a Layer 2 network.

Understanding Loops in Layer 2 Networks:

Layer 2 switches flood broadcast and unknown unicast packets.

If there is a loop, these packets can circulate indefinitely, leading to a broadcast storm.

Consequences of Broadcast Storms:

High CPU usage on network devices.

Degraded network performance or complete failure.

Solution:

Spanning Tree Protocol (STP) is implemented to prevent loops by selectively blocking redundant links.

Conclusion:

Since loops lead to broadcast storms, the statement is TRUE.

References: HCIA-Datacom V1.0 Certification Guide, Chapter 8: Spanning Tree Protocol.