What is a subprime mortgage?(1 point)

Question

Responses

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

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

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

A loan granted to banks with excellent credit histories.

Answer 1

A subprime mortgage is a loan granted to individuals with poor credit histories.

Answer 2

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

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

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

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

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

Answer 3

During the bubble, the correct response is: Demand was up, supply was down, and home prices started rising.

Answer 4

What was the Governments response to the financial crisis? (At least 2 examples)(3 points)

Answer 5

The government's response to the financial crisis included a variety of measures. Here are two key examples:

1. Troubled Asset Relief Program (TARP): In 2008, the U.S. government enacted TARP, which allocated $700 billion to purchase toxic assets and equity from financial institutions to strengthen their balance sheets and promote stability in the financial system. This program aimed to restore confidence in the banking sector and prevent further failures.

2. Federal Reserve Actions: The Federal Reserve implemented several monetary policy measures, including lowering interest rates to near-zero levels and conducting quantitative easing (QE). Through QE, the Fed purchased large amounts of government securities and mortgage-backed securities to inject liquidity into the economy and encourage lending and investment.

These responses were part of broader efforts to stabilize the financial system, restore trust in the markets, and prevent a deeper recession.