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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Definitions:

Affect

A term referring to the underlying experience of feeling, emotion, or mood.

Cognition

The mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.

Social Learning

The process of acquiring new behaviors and knowledge by observing and imitating others.

Modeling

The process of learning through the observation of others' behaviors, attitudes, or emotional expressions.