An Important Factor in Producing the Global Financial Crisis Was

question 82

Multiple Choice

An important factor in producing the global financial crisis was

• A)lax consumer protection regulation.
• B)onerous rules placed on mortgage originators.
• C)weak incentives for mortgage brokers to use complicated mortgage products.
• D)strong incentives for the mortgage brokers to verify income information.

---

Definitions:

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, allowing for competition but also some degree of market power.

Economic Profits

Profits calculated after considering both explicit and implicit costs, representing the total opportunity costs.

Loses

Refers to the situation where expenses surpass revenues, resulting in negative financial performance.

Long-Run Monopolistically Competitive Equilibrium

The condition in which firms in a monopolistically competitive market earn just enough revenue to cover all costs, including a normal profit, in the long term.