Which of the following accurately describes the relationship between mortgage default rates and the 2008 recession?
a. The recession of 2008 triggered the initial increase in the mortgage default rate.
b. The rise in the mortgage default rate preceded the recession and it was a major cause of the 2008 economic downturn.
c. Both the increase in the mortgage default rate and the economic recession were the result of the stock market crash of 2008.
d. The rise in the mortgage default rate and the economic recession were separate issues and there was no relationship between the two.
B
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A given change in disposable income would have the smallest effect on consumption with which of the following marginal propensities to consume?
a. 0.4 b. 0.6 c. 0.8 d. 0.2
According to the Keynesian view, if purchasers buy more goods and services than businesses expect,
a. the inventories of firms would decline, and the firms would expand output in order to restore their inventories to desired levels. b. the inventories of firms would increase, and the firms would reduce output until inventories were cut back to the desired level. c. the current level of income would persist in the future. d. firms would reduce their investment, and the economy would fall into a recession.