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.

---

Definitions:

High-wage Nation

A country where the average income or wage level is significantly higher than the global average.

Oppose Immigration

The stance or action of being against the movement of people into a country to live or work.

Complementary Resources

Resources that are used together in the production of a good or service, such that an increase in the price of one leads to a decrease in the supply of the other.

Substitute Resources

Alternative resources that can be used in place of another in the production process, often in response to changes in price.