When the Housing Bubble Collapsed, the Entire Borrowing and Lending

question 32

Multiple Choice

When the housing bubble collapsed, the entire borrowing and lending engine of the economy ground to a halt because:

• A) no one could tell which banks were safe, and which were not.
• B) banks wanted to lend to no one, in case they turned out to be a bad risk.
• C) the herd instinct became to not borrow or lend.
• D) All of these statements are true.

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