The destabilizing effects of defaulting mortgages quickly spread throughout the financial system because those mortgages were involved in widespread:
A. Diversification
B. Securitization
C. Multiplier effect
D. Real-balance effect
B. Securitization
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A classical model of the economy predicts
A) full employment in the long run. B) a 15 to 20 percent unemployment level whenever the economy is in equilibrium. C) the same unemployment rates as the Keynesian model. D) cyclical changes in the unemployment rate.
Disclosing information in more usable ways to decision-makers:
A. can nudge people toward making better decisions. B. can decrease the occurrence of rational ignorance in decision-making. C. has been useful to organizations like the EPA in getting desired outcomes, like people deciding to buy more gas-efficient cars. D. All of these statements are true.
Excessive leverage can be traced to lax regulation and inadequate laws.
Answer the following statement true (T) or false (F)
Some behavioral economists explain the so-called "endowment effect" to be a consequence of people's tendency to:
A. Feel gains more intensely than losses B. Feel losses more intensely than gains C. Focus mentally on a recently-viewed number D. Feel strongly about fairness and generosity