Which of the Following Was a Contributing Factor to the Rising

question 85

Multiple Choice

Which of the following was a contributing factor to the rising default and foreclosure rates beginning in the latter half of 2006?

• A) The increasing share of 30-year, fixed rate loans as a share of outstanding mortgages.
• B) The rigid standards of rating agencies, such as Moody's and Standard and Poors, which limited the development of mortgage-backed securities.
• C) The price-stability policies of the Federal Reserve during 1998-2008.
• D) The erosion of lending standards during the preceding decade.

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Definitions:

Indifference Curves

Graphs representing combinations of different goods that provide an individual with the same level of satisfaction, showing consumer preferences.

Total Utility

The cumulative satisfaction or value that a person derives from consuming a certain quantity of goods or services.

Indifference Curve

A graph showing combinations of goods between which a consumer is indifferent, representing equal levels of satisfaction.

Convex

In economics, a shape of the curve describing a relationship that yields increasing returns or benefits, where the slope increases as you move from left to right.