The Boom in 'Sub-Prime' Lending (Which Was the Source of the GFC)was

question 63

Multiple Choice

The boom in 'sub-prime' lending (which was the source of the GFC) was motivated by the:

• A)desire to help low-income minority groups
• B)belief that the repayment capacity of borrowers had been misrepresented
• C)desire for high risk and return investments
• D)belief that housing prices would always rise
• E)provision of subsidies by the US government.

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Definitions:

Utility Function

A mathematical representation of how consumers rank different bundles of goods based on the satisfaction or utility those goods provide.

Indifference Curve

A graphical representation of different bundles of goods between which a consumer is indifferent, showing the combinations of two goods that give the consumer the same level of satisfaction.

Horizontal Axis

In a graph or chart, the horizontal axis is typically used to represent the independent variable or the base measurement.

Vertical Axis

In a graph or chart, the vertical line or axis is typically used to represent the range of values for a dependent variable.