Which of the following was not a factor that contributed to the subprime mortgage crisis?
A. False security derived from FDIC insurance on mortgage loans
B. Lower down payments
C. Households devoting 25 percent or more of their income to mortgage payments
D. Lending to households with adverse credit ratings
Answer: A
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Refer to Figure 4-1. If the market price is $2.50, what is the maximum number of ice cream cones that Kendra will buy?
A) 1 B) 2 C) 3 D) 4
For a country with flexible exchange rates, if a nation's interest rate rose, what effect would this have on its current account balance?
a. No effect because interest has no effect on the current account. b. Increase it because foreign capital flows would be attracted to the nation thereby building economic strength. c. Decrease it because the exchange rate will appreciate. d. Increase it because the exchange rate will depreciate. e. Decrease because the exchange rate will depreciate.
How are the marginal revenue product (MRP) curve and the demand curve for capital related?
a. MRP slopes downward, forcing demand to rise. b. The MRP and demand curves are the same. c. MRP slopes downward, pushing demand toward equilibrium. d. MRP crosses the demand curve at its lowest point.
An investor puts $2,000 into an investment that will pay $2,500 one-fourth of the time; $2,000 one-half of the time, and $1,750 the rest of the time. What is the investor's expected return?
A. 12.5% B. 3.125% C. $250.00 D. 6.25%