One of the Trigger Points for the Financial Crisis of 2007-2009

question 88

Multiple Choice

One of the trigger points for the financial crisis of 2007-2009 was when

• A) interest rates on adjustable-rate mortgages were reset at a higher level.
• B) foreigners started to sell off their holdings of U.S. financial instruments.
• C) the Federal Reserve started to raise short-term interest rates.
• D) the federal government started to engage in deficit spending.

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Definitions:

Marginal Revenue Product

The increased earnings resulting from the application of one additional production factor, such as workforce or investment.

Additional Revenue

Extra income received by a business or government beyond what was originally forecasted or expected.

Factor of Production

Resources used in the production of goods and services, such as labor, capital, land, and entrepreneurship.

Demand

The quantity of a product or service that consumers are willing and able to purchase at various prices during a specific time period.