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:

Concentrated KMnO4

Potassium permanganate in a high concentration, a strong oxidizing agent used in qualitative organic analyses and in various other chemical processes.

1-Hexanol

An organic alcohol compound with a six-carbon chain terminating in a hydroxyl group, used primarily as a flavoring agent or perfume ingredient.

Chromic Acid

A powerful oxidizing agent used in organic chemistry and for cleaning laboratory glassware, consisting mainly of a mixture of chromium trioxide and sulfuric acid.

Organic Halide

Organic compounds containing a halogen atom (fluorine, chlorine, bromine, or iodine) covalently bonded to carbon; utilized in various chemical syntheses and reactions.