Some Analysts Blame the Financial Crisis of 2007-2009 on Federal

question 163

Multiple Choice

Some analysts blame the financial crisis of 2007-2009 on Federal Reserve policy. They argue that

• A) a restrictive policy lowered aggregate demand and GDP.
• B) low interest rates encouraged excessive mortgage borrowing, leading to the housing bubble.
• C) the Fed securitized the mortgages into collateralized debt obligations and encouraged excessive risk taking.
• D) did not adequately regulate the mortgage market's credit standards for issuing loans as required by the Federal Reserve Act.

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Definitions:

Sales Invoice

A document issued by a seller to a buyer that lists products or services provided and states the sum due for these.

Credit

An accounting entry that increases liabilities or equity or decreases an asset or expense.

Purchase Invoice

A purchase invoice is a document issued by a seller to a buyer that outlines the sale transaction, including the types of products or services sold, quantities, prices, and payment terms.