A key reason that most people did not anticipate the severity of the Great Recession is that
A) they thought the Bank of Canada would reduce the target for the federal funds rate to a lower level.
B) they did not believe that the federal government would actually bail out large financial institutions.
C) they failed to see the financial crisis coming.
D) they were more worried about rising inflation than about falling real GDP.

Question

Quizplus · Accepted Answer

The Great Recession was primarily caused by a financial crisis stemming from the housing market, and many people did not anticipate the severity of the crisis because they failed to see it coming. There were warning signs, such as the subprime mortgage crisis, but many people underestimated the potential impact of these issues on the broader economy. Choices A, B, and D may have been factors in people's expectations about the economy, but they were not the primary reason why most people did not anticipate the severity of the Great Recession.

A Key Reason That Most People Did Not Anticipate the Severity