Question

Most securitization of prime mortgages is done by

		private investment banks
		Savings & loans
		Fannie Mae and Freddie Mac
		Mortgage originators

The sharp increase in housing prices in the lead up to the financial crisis was fueled by

		ability of borrowers to easily borrow without putting the usual 20% down-payment on the house
		expectations that home prices would continue to increase
		deterioration of income and credit requirements on much mortgage lending
		all of the above

Two major shocks that led to the Great Recession were

		housing price decline, government spending increase
		decline in household wealth, negative credit shock
		negative credit shock, monetary policy shock
		negative credit shock, trade war

Deflation is particularly debilitating for an economy because with deflation

		spending rises
		people postpone spending and the value of assets declines
		interest rates increase
		an ever increasing spiral of higher spending is generated

The 1980-82 recession was caused by

		fiscal policy
		tariffs
		monetary policy
		finanical crisis

Answer 1