One of Main Reasons Why Lenders and Borrowers in the Sub-Prime

question 73

Multiple Choice

One of main reasons why lenders and borrowers in the sub-prime mortgage market were willing to exchange risky loans prior to the 2008 financial crisis in the U.S.was

• A)low housing prices.
• B)lack of regulations.
• C)the expectations of higher housing prices.
• D)willingness to own a house.

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Definitions:

Fed

An abbreviation often referring to the Federal Reserve System, which is the central banking system of the United States.

Conditional Response

A learned response that becomes associated with a previously unrelated stimulus as a result of conditioning.

Classical Conditioning

A learning process that occurs when two stimuli are repeatedly paired: a response that is at first elicited only by the second stimulus is eventually elicited by the first stimulus alone.

Rescorla

A psychologist recognized for his work on associative learning and the contingency theory in classical conditioning.