Exam 20: Appendix: the Crisis of 2008: Causes and Lessons for the Future

Since 2002, the Fed has shifted to expansionary monetary policy, then to restrictive policy, and then back to expansionary monetary policy. Policy shifts of this type are most likely to

The Fed's low short-term interest rate policy from 2002-2004, along with housing regulations promoting low down-payment loans to sub-prime borrowers, encouraged

Which of the following is true of regulation?

Which of the following describes the relationship between interest rates and interest-sensitive goods, such as housing?

The leverage ratio of an investment firm refers to

As short-term interest rates began to rise in 2005, which one of the following mortgage loan categories experienced the largest increase in default and foreclosure rates?

During 1979-2005, the mortgage default rate

Which of the following makes it difficult for monetary policy-makers to institute policy changes in a manner that will promote economic stability?

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

Which of the following is most central to the understanding of the economic crisis of 2008?

Which of the following is most likely to result from a rising household debt/income ratio?

Since 1995, federal regulations have

Which of the following contributed to the soaring housing prices during 2002-2005?

Fannie Mae and Freddie Mac held a competitive advantage over other mortgage lenders primarily because

In 2008-2009, which of the following weakened the demand stimulus effects of expansionary fiscal policy?

Which of the following reforms would reduce the likelihood of a future financial crisis?

Adjustable rate mortgages became increasingly attractive and grew as a percentage of total outstanding mortgages during 2002 to 2004 because

Regulatory policies requiring lenders to extend more low down-payment loans to higher-risk borrowers along with the Fed's low short-term interest rate policy during 2002-2004 caused

Are new regulations likely to prevent a future financial crisis?

Which of the following is an example of how incentive structures contributed to the collapse of investment banks?