Explain the Flaws in 'Sub-Prime' Lending in the US and How

question 57

Essay

Explain the flaws in 'sub-prime' lending in the US and how it contributed to the GFC.

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Definitions:

Income Increases

A rise in the amount of money received, especially on a regular basis, for work or through investments, which can impact consumption, savings, and overall economic well-being.

Quantity Demanded

The specific amount of a product that consumers are willing to buy at a given price, holding all other factors constant.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded.

Complements

Goods that are often used together, where an increase in demand for one leads to an increase in demand for the other.