1. What is a subprime mortgage?(1 point)

Question

a. A loan granted to individuals with excellent credit histories.

b. A loan granted to individuals with poor credit histories.

c. A loan granted to businesses with poor credit histories.

d. A loan granted to banks with excellent credit histories.

2. What happened with supply and demand during the bubble?(1 point)

a. Demand was up, supply was down, and home prices started rising.

b. Supply was up, demand was up, and home prices started rising.

c. Supply was up, demand was down, and home prices started collapsing.

d. Demand was down, supply was down, and home prices started collapsing.

3. What was the Governments response to the financial crisis? (At least 2 examples)(3 points) Write in 3-4 sentences

Answer 1

1. What is a subprime mortgage? (1 point)

b. A loan granted to individuals with poor credit histories.

2. What happened with supply and demand during the bubble? (1 point)

a. Demand was up, supply was down, and home prices started rising.

3. What was the government's response to the financial crisis? (At least 2 examples) (3 points)

In response to the financial crisis, the U.S. government implemented several key measures to stabilize the economy. One significant action was the Troubled Asset Relief Program (TARP), which allocated $700 billion to purchase distressed assets and provide capital to banks. Additionally, the Federal Reserve lowered interest rates significantly and introduced quantitative easing, aimed at stimulating the economy by encouraging borrowing and investment. These interventions were designed to restore confidence in the financial system and promote economic recovery.