What Was the Chain of Events That Occurred 2008-2009 When

question 50

Multiple Choice

What was the chain of events that occurred 2008-2009 when the U.S. "housing bubble collapsed"?

• A) Home prices rose out of the reach of households; home sales fell; and banks were left with no borrowers for their excess reserves, creating a crisis for banks.
• B) Savings increased, leading to less investment in homes; a lower demand for homes caused drops in home prices, which led to unemployment in the construction industry.
• C) Home values fell below mortgage values; homeowners defaulted on these loans, causing losses to financial firms, investors, and banks.
• D) Banks foreclosed on mortgage loans, which caused housing prices to drop, which led to interest rates rising so that homes became unaffordable.

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