What was the source of the problems encountered by many financial firms during the late 2000s?
What will be an ideal response?
The primary source of the problems was that financial firms began securitizing home mortgages. This created a large increase in mortgages being granted to "sub-prime" borrowers, who are borrowers with flawed credit histories, and "Alt-A" borrowers, who did not have to document their incomes when applying for mortgages. When housing prices began falling in 2006, many of these borrowers began to default on their mortgages, causing many financial institutions to suffer heavy losses.
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Refer to the information above. If an economy has a real GDP doubling-time of 48 years, this can be reduced to 30 years if annual GDP growth is raised by ________ percentage points
A) 4 B) 2.4 C) 1.6 D) 0.9
The Commons Problem arises because
A) firms don't maximize profits. B) social and private incentives are not aligned and property rights are missing. C) social cost equals private cost and property rights are missing. D) social benefit equals private benefit and property rights are missing.