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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When voluntary exchange takes place, both parties gain from the exchange
Indicate whether the statement is true or false
In the real world, ____ factors that affect demand and supply can change at once.
a. many b. isolated c. no d. psychological
The nominal rate of interest is the difference between the real rate and the expected rate of inflation
a. True b. False Indicate whether the statement is true or false
Which statement is false?
A. Suburbanization was the migration of tens of millions of middle-class Americans—nearly all of them white—from the cities to the suburbs. B. The people who moved to the suburbs were replaced in the cities by millions of poor people, the large majority of whom were black and Hispanic. C. The inner cities today are socially isolated from the rest of the country. D. None of these statements are false.