Question

1.

Although there were very large losses experienced by many financial firms, it was clear which firms would lose, and the amounts they would lose. This "certainty" reduced the economic impact of the "crisis."

True

False

2.

The interest rate on very short term loans between banks (LIBOR = London Interbank Offered Rate) increased during the financial crisis.

True

False

3.

Dr. Bernanke argued two problems contributing to the financial crisis included:

Group of answer choices

banks reliance on long-term funding; and the increased use of non-standard mortgages such as fixed rate, 30-year mortgages.

banks reliance on short term funding; and the increased use of non-standard mortgages such as Adjustable Rate Mortgages ARMS.

banks reliance on short term funding; and the increased use of non-standard mortgages such as fixed rate, 30-year mortgages.

banks reliance on long-term funding; and the increased use of non-standard mortgages such as Adjustable Rate Mortgages ARMS.

4.

The primary cause of the financial crisis discussed in this video was:

decline in exports of the United States

turmoil in the Middle East and the rise of ISIS in Syria and Iraq.

Greek financial difficulties and their inability to repay lenders.

decline in the value of securities backed by mortgage loans

conflict between Ukraine and Russia

5.

A "deterioration of lending practices" occurs when:

loans are made only to people who can prove they do not need a loan.

lenders make more fixed rate long term loans.

loans are provided to people who are unlikely to be able to repay.

lenders require larger down payments by borrowers.

Answer 1

1. False.

2. True

3. Correct option is A. Dr. Bernanke argued two problems contributing to the financial crisis included banks reliance on long-term funding; and the increased use of non-standard mortgages such as fixed rate, 30-year mortgages.

4. Correct option is B. The primary cause of the financial crisis discussed in this video was Greek financial difficulties and their inability to repay lenders.

5. A "deterioration of lending practices" occurs when loans are provided to people who are unlikely to be able to repay.