Which of the Following Contributed to the Banking Crisis of 2008

question 48

Multiple Choice

Which of the following contributed to the banking crisis of 2008?

• A) The Federal Reserve Bank had kept interest rates at unprecedentedly high levels.
• B) Banks and other lending institutions eliminated "subprime" mortgages.
• C) Wall Street bankers withdrew themselves from the mortgage market.
• D) The Federal Reserve Bank and other regulatory agencies slowed the speculative frenzy.
• E) Public and private policies favored economic speculation and get-rich-quick schemes.

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Definitions:

Highly Contested

Describes a situation, item, or issue that is the subject of intense competition or dispute among parties.

Price Searchers

Firms or individuals that have the flexibility to set their prices because they offer unique products or services and face little to no direct competition.

Entry Barriers

Impediments that make it difficult for new participants to enter a specific industry or business field.

Monopolistic Competition

A term often used by economists to describe markets characterized by a large number of sellers that supply differentiated products to a market with low barriers to entry. Essentially, it is an alternative term for a competitive price-searcher market.