Many Borrowers Defaulted on Subprime Mortgages Ultimately Disrupting Financial Markets

question 43

Multiple Choice

Many borrowers defaulted on subprime mortgages ultimately disrupting financial markets by August 2007.Which of the following is a likely result of this increase in financial frictions?

• A)The AD curve likely shifted left which caused a positive inflation gap.
• B)The AD curve likely shifted right which caused a positive inflation gap.
• C)The AD curve likely shifted left which caused an upward movement along the MP curve to a higher general equilibrium interest rate.
• D)The AD curve likely did not shift.
• E)none of the above

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Definitions:

HDL

stands for High-Density Lipoprotein, often called "good" cholesterol, which helps remove other forms of cholesterol from your bloodstream.

Myocardial Infarction

A medical term for a heart attack, which occurs when blood flow to the heart muscle is blocked, causing tissue damage.

CAD

Coronary Artery Disease, a condition involving the narrowing or blockage of the coronary arteries that can lead to heart attack.

MI

Myocardial Infarction, commonly known as a heart attack, occurs when blood flow to part of the heart is blocked.