Which of the Following Was Not a Factor That Contributed

question 42

Multiple Choice

Which of the following was not a factor that contributed to the subprime mortgage crisis?

• A)false security derived from FDIC insurance on mortgage loans 
• B)lower down payments 
• C)households devoting 25% or more of their income to mortgage payments 
• D)lending to households with adverse credit ratings

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Definitions:

Functional Fixedness

A cognitive bias that limits a person to use an object only in the way it is traditionally used, ignoring other possible uses.

Noncompensatory Modeling

A decision-making process where options are evaluated based on whether they meet predetermined criteria, without considering trade-offs between characteristics.

Insight

A sudden understanding or realization of a problem's solution, often coming unexpectedly after a period of contemplation or seeming like a spontaneous revelation.

Mental Set

A psychological tendency or mindset to approach problems in a specific way due to past experiences or habits.