Which of the following was a contributing factor to the instability of 2002 to 2008?
A) ideal weather from 2002 to 2006, followed by a severe drought in 2007 and 2008
B) falling housing prices leading to an expansion, followed by rising housing prices leading to a sharp economic downturn
C) an increase in housing prices leading to an expansion, followed by a collapse in housing prices and a sharp economic downturn
D) falling stock prices leading to an expansion, followed by rising stock prices leading to a sharp economic downturn

Question

Which of the following was a contributing factor to the instability of 2002 to 2008?
A) ideal weather from 2002 to 2006, followed by a severe drought in 2007 and 2008
B) falling housing prices leading to an expansion, followed by rising housing prices leading to a  sharp economic downturn
C) an increase in housing prices leading to an expansion, followed by a collapse in housing prices and a sharp economic downturn
D) falling stock prices leading to an expansion, followed by rising stock prices leading to a  sharp economic downturn

Quizplus · Accepted Answer

The increase in housing prices followed by a collapse in housing prices and a sharp economic downturn was a key contributing factor to the instability of 2002 to 2008. This led to the subprime mortgage crisis and the collapse of many financial institutions, which ultimately led to the global financial crisis.

Which of the Following Was a Contributing Factor to the Instability