The Increase of Sub-Prime (Including Alt-A) Loans as a Share

question 26

Multiple Choice

The increase of sub-prime (including Alt-A) loans as a share of the total from 2001-2005 was an important contributing factor to the economic crisis of 2008 because

• A) these loans initially reduced the demand for housing.
• B) these loans initially reduced housing prices.
• C) the default and foreclosure rates on these loans are several times higher than conventional loans to prime borrowers.
• D) the default and foreclosure rates on these loans are considerably lower than conventional loans to prime borrowers.

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Definitions:

Eating Disorder

A group of psychological conditions marked by abnormal or disturbed eating habits that negatively affect a person's physical and mental health.

Cognitive-Behavioral Therapy (CBT)

Treatment focused on changing negative patterns of thinking and solving concrete problems through brief sessions in which a therapist helps a client challenge negative thoughts, consider alternative perspectives, and take effective actions.

Interpersonal Therapy (IPT)

More structured, short-term version of psychodynamic therapies.

Bulimia Nervosa

A disorder involving cycles of excessive eating and then engaging in behaviors to avoid gaining weight by purging.