Which of the following is the main reason behind the financial crisis of 2008?
A)There was a sharp decline in the growth rate of money supply.
B)There was a sharp increase in the quantity of exports from the U.S.to Asian countries.
C)Banks in the U.S.made subprime mortgage loans.
D)Banks had much higher requirements for borrowers to qualify for loans than normal.

Question

Quizplus · Accepted Answer

The main reason behind the financial crisis of 2008 was the banks in the U.S. making subprime mortgage loans. These loans were given to individuals who did not have the financial capability to pay them back, resulting in a large number of defaults and foreclosures. This led to a sharp decline in the value of mortgage-backed securities and triggered the financial crisis. Factors like a decline in the growth rate of money supply or an increase in the quantity of exports from the U.S. to Asian countries may have had some impact, but they were not the main reasons behind the crisis. Option D, stating that banks had much higher requirements for borrowers to qualify for loans than normal, is incorrect as subprime loans were given to borrowers who did not meet the normal requirements.

Which of the Following Is the Main Reason Behind the Financial