As the Housing Bubble Collapsed, the Cycle of Defaults and Falling

question 38

Multiple Choice

As the housing bubble collapsed, the cycle of defaults and falling prices began that would ultimately cause home values to:

• A) fall by more than 90 percent in the hardest-hit areas.
• B) stop rising, practically halting the mortgage loan industry for a number of years.
• C) fall by more than 50 percent in the hardest-hit areas.
• D) fall by about 25 percent in the hardest-hit areas.

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Definitions:

Overhead Applied

The allocation of estimated overhead costs to specific jobs or production units during an accounting period.

Direct Labor Cost

The wages and related benefits of employees who are directly involved in the production of goods or services.

Manufacturing Overhead

All indirect costs associated with the production of goods, such as utilities and salaries for non-direct labor.

Direct Materials Costs

The expense associated with raw materials or components that are directly included in a manufactured product.