Some Analysts Blame the Financial Crisis of 2008 on Fed

question 192

Multiple Choice

Some analysts blame the financial crisis of 2008 on Fed policy.They argue that:

• A) a restrictive policy lowered aggregate demand and GDP.
• B) low interest rates encouraged excessive mortgage borrowing,leading to the housing bubble.
• C) the Fed securitized the mortgages into collateralized debt obligations and encouraged excessive risk taking.
• D) did not adequately regulate the mortgage market's credit standards for issuing loans as required by the Federal Reserve Act.

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Definitions:

Decision makers

Individuals or entities responsible for making choices or judgments in a given situation, particularly in organizational or managerial contexts.

Uncertain environment

An uncertain environment is characterized by unpredictable and volatile conditions that make planning and decision making challenging.

Risk

The exposure to the chance of loss or adverse outcomes, which can stem from financial, operational, or strategic uncertainties.

Decision-Making

The act of choosing by pinpointing a decision, acquiring information, and considering various alternatives.