Question 1

The secondary mortgage market is the market

Accepted Answer

A) designated specifically for prime and other low risk mortgages. 
B) designated specifically for sub-prime and other high risk mortgages. 
C) where mortgages originated by a lender are sold to another financial institution. 
D) where home purchasers borrow funds from mortgage originators. 
A) designated specifically for prime and other low risk mortgages. 
B) designated specifically for sub-prime and other high risk mortgages. 
C) where mortgages originated by a lender are sold to another financial institution. 
D) where home purchasers borrow funds from mortgage originators.

Question 2

When expansionary monetary policy pushes interest rates to artificially low levels,

Accepted Answer

A) the demand for and prices of interest-sensitive goods,like housing,will increase. 
B) people will delay their purchases of interest-sensitive goods,like housing,into the future. 
C) the demand for interest-sensitive goods,like housing,will increase,but their prices will decline. 
D) the demand for and prices of interest-sensitive goods,like housing,will decline. 
A) the demand for and prices of interest-sensitive goods,like housing,will increase. 
B) people will delay their purchases of interest-sensitive goods,like housing,into the future. 
C) the demand for interest-sensitive goods,like housing,will increase,but their prices will decline. 
D) the demand for and prices of interest-sensitive goods,like housing,will decline.

Question 3

Which of the following was an underlying cause of the economic crisis of 2008?

Accepted Answer

A) a failure of government to impose regulations on Fannie Mae,Freddie Mac,and other mortgage lenders 
B) the imposition of government regulations on Fannie Mae,Freddie Mac,and other lending institutions that eroded the conventional lending standards in place prior to the mid-1990s 
C) greedy mortgage lenders who extended risky loans to sub-prime borrowers even though the regulators were trying to limit these loans 
D) federal housing regulations that made it difficult for Fannie Mae,Freddie Mac,and other lending institutions to obtain sufficient loanable funds for the finance of housing construction 
A) a failure of government to impose regulations on Fannie Mae,Freddie Mac,and other mortgage lenders 
B) the imposition of government regulations on Fannie Mae,Freddie Mac,and other lending institutions that eroded the conventional lending standards in place prior to the mid-1990s 
C) greedy mortgage lenders who extended risky loans to sub-prime borrowers even though the regulators were trying to limit these loans 
D) federal housing regulations that made it difficult for Fannie Mae,Freddie Mac,and other lending institutions to obtain sufficient loanable funds for the finance of housing construction

Question 4

Many investment banks quickly collapsed when the housing market collapsed because

Accepted Answer

A) the Federal Reserve was unwilling to provide them with short-term loans. 
B) they ignored the risk assigned by the rating agencies,resulting in leverage ratios that were too low. 
C) new regulations required investment banks to maintain more capital against their residential housing loans than was true for commercial business loans. 
D) they were highly leveraged and had little reserves on hand to meet the short-term debt obligations of the mortgage-backed securities. 
A) the Federal Reserve was unwilling to provide them with short-term loans. 
B) they ignored the risk assigned by the rating agencies,resulting in leverage ratios that were too low. 
C) new regulations required investment banks to maintain more capital against their residential housing loans than was true for commercial business loans. 
D) they were highly leveraged and had little reserves on hand to meet the short-term debt obligations of the mortgage-backed securities.

Exam 33: The Crisis of 2008: Causes and Lessons for the Future

The secondary mortgage market is the market

When expansionary monetary policy pushes interest rates to artificially low levels,

Which of the following was an underlying cause of the economic crisis of 2008?

Many investment banks quickly collapsed when the housing market collapsed because

The Economic Approach

Asome Tools of the Economist

Asupply,demand,and the Market Process

Asupply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

Ataking the Nations Economic Pulse

Economic Fluctuations, unemployment, and Inflation

Aan Introduction to Basic Macroeconomic Markets

Dynamic Change, economic Fluctuations, and the Ad-As Model

Fiscal Policy: the Keynesian View and Historical Perspective

Fiscal Policy, incentives, and Secondary Effects

Amoney and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, output, and Employment

Creating an Environment for Growth and Prosperity

Institutions,policies,and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Consumer Choice and Elasticity

Acosts and the Supply of Goods

Aprice Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Aprice-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Government Spending and Taxation

The Economics of Social Security

The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Great Debates in Economics: Keynes Versus Hayek

Lessons From the Great Depression

Lessons From Japan and Canada

The Federal Budget and the National Debt

The Economics of Healthcare

Education: Problems and Performance

Earnings Differences Between Men and Women

Do Labor Unions Increase the Wages of Workers

The Question of Resource Exhaustion

Difficult Environmental Cases and the Role of Government

Filters