GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Consumer confidence was low due to the war in Iraq
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Banks and other lenders were willing to make increasingly large volumes of risky loans
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The American government was in debt to the IMF and interest rates were increased significantly
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Baked beans
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Detailed explanation-1: -The catalysts for the GFC were falling US house prices and a rising number of borrowers unable to repay their loans. House prices in the United States peaked around mid 2006, coinciding with a rapidly rising supply of newly built houses in some areas.
Detailed explanation-2: -Answer and Explanation: The major cause of the financial crisis of 2008 was the negligence of banks while giving loans and the crisis in the subprime mortgage market. Many large banks held a large number of Mortgage-Backed Securities.
Detailed explanation-3: -The root cause was excessive mortgage lending to borrowers who normally would not qualify for a home loan, which greatly increased risk to the lender. Lenders were willing to take this risk as they could simply package the loans into an instrument they sold, passing the risk on to investors.