How Did the Collapse of the Housing Bubble Cause a Contraction

question 94

Multiple Choice

How did the collapse of the housing bubble cause a contraction in output?

• A)Because banks were unwilling to lend,many businesses were suddenly unable to access credit for their day-to-day needs.
• B)When homeowners lost value in their homes,they stopped saving,which reduced banks' ability to lend.
• C)Because consumers lost confidence in the banking industry,they stopped depositing money,so banks could no longer lend.
• D)None of these explains how the housing bubble collapse led to reduced output.

---

Definitions:

Standards of Living

The level of wealth, comfort, material goods, and necessities available to a certain socioeconomic class or a certain geographic area.

IQ Scores

Quantitative measurements used to assess human intelligence, derived from standardized tests.

Interracial

Pertaining to relationships, unions, or interactions between people of different racial backgrounds.

Upper-middle-class

A socio-economic class in society characterized by higher education levels, professional occupations, and relative financial stability and comfort.