In 2004, the SEC lifted regulations on leverage ratios, how was did a problem?

banks could borrow more money to invest more in housing

Howdid declining lending standards contribute to the 2008 recession?

subprime borrowers getting mortgages, which bid up prices

How was a savings surplus in east Asia aproblem for US and European housing markets?

It led to more money going into the housing market

Whatrole did credit rating agencies play in the 2008 recession?

rated bad assets as being good, leading to them beingbought

What was the problem with over-the-counter derivatives?

unregulated, which led to a lack ofunderstanding of them

How did interest rates after the tech bubble of the early2000s, contribute to the recession?

Lower interest rates led to declining lending standards

How was the Federal Reserve a contributingfactor in the Great Depression?

not providing enough support to banks,causing bank failures

How were war debts in Europe acontributing factor to the Great Depression?

led to low aggregate demand from Europefor US goods

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Great Recession and Great Depressions Causes

25 termsStudBud Administration225 plays

Great Recession and Great Depression Causes #greatdepression #greatrecession #speculation #securitization #tariff #federalreserve #overproduction #deriviative #mortgagebackedsecurities #debt #leverage #creditdefaultswaps #collateralizeddebtobligations

Flashcards25 cardsFPractice quizPHost liveL

Questions 25

Answers

1
In 2004, the SEC lifted regulations on leverage ratios, how was did a problem?
It meant that banks had to start taking onless risk
It meant banks owed too much money, leading to a debt crisis
It meant banks were making too little money
banks could borrow more money to invest more in housing
2
Howdid declining lending standards contribute to the 2008 recession?
A. Itled to banks getting poorer in the short run
led to more rich people getting access to credit
A. Itled to declining housing prices
subprime borrowers getting mortgages, which bid up prices
3
How was a savings surplus in east Asia aproblem for US and European housing markets?
It led to more money going into the housing market
too little money left for people in east Asian countries
ed to less money into t-bonds, which created a debt crisis
It led to more capital back into Asia
4
The pooling of debt, for example, mortgage backed securities
Leverage
Credit Default Swap
Derivative
Securitization
5
Why were stocks overpriced?
High demand from Europe
A rapidly growing economy
Overproduction
Speculation
6
Whatrole did credit rating agencies play in the 2008 recession?
ratedgood assets as being bad, misleading investors.
were paid for by foreign governments to destroy the US
were paid for by the banks to benefit the banks
rated bad assets as being good, leading to them beingbought
7
Inability of consumers to purchase thee products produced &tariff policy led to the problemof?
overproduction in industry
Over indebtedness
underproduction in industry
overconsumption
8
An insurance policy on a stock, bond, or other asset
Leverage
Securitization
Credit Default Swap
Derivative
9
Why were surplus products produced in US factories unable to be sold inlarge amounts in Europe?
A and B
Europe Tariffs on US goods
Hitler and Mussolini didn’t believe in trade
Large war debts lowered demand in Europe
10
What percentage of Americans had no savings in the 20s?
30
100
80
0
11
Which company is most associated withcredit default swaps?
AIG
Bank of America
JP Morgan
Barclay’s
12
What’s buying stock on the margin?
Speculation
Borrowing money to invest
Buying only a little stock
Pawning goods to make money
13
Which of these were not a problem with theUS stock market during the crash in 1929?
overregulation of stocks
Stocks bought on the margin
Speculation
fraud
14
Buying risky stocks for short term profit
Derivative
Speculation
Securitization
Leverage
15
What percentage of Americans still livedon farms?
5%
50%
90%
30%
16
What was the problem with over-the-counter derivatives?
were too large & thus taking money from other markets
were over regulated, which didn’t allowfor innovation
unregulated, which led to a lack ofunderstanding of them
were too small, which didn’t allowfor more access to credit
17
How did interest rates after the tech bubble of the early2000s, contribute to the recession?
Lower interest rates led to declining lending standards
Higher rates led to less credit, thus houses more valuable
Lower interest rates led to higher mortgage rates
Higher rates led to increasing lending standards
18
How was the Federal Reserve a contributingfactor in the Great Depression?
By keeping interest rates too high in the Great Depression.
By keeping interest rates too low in the Great Depression
providing too much support tobanks,leading to bank failures
not providing enough support to banks,causing bank failures
19
Why did farmer’s income decline in the1920s?
Worldwide communist revolutions
overproduction of crops
overproduction of industrial goods
overconsumption of farming goods
20
How were bank regulators affected by adverse incentives?
Banks often chose their own regulators
Banks often had many regulators
Banks were complaining they were under regulated
Both A and B
21
Mortgage where the rate changesbased on the interestrates set by the Federal Reserve increase.
Fixed Rate Mortgage
Hybrid Mortgage
Amortization
Adjustable Rate Mortgage
22
A contract whose value stems from anotherasset or event
Leverage
Securitization
Derivative
Credit Default Swap
23
Taking on debt
Credit Default Swap
Leverage
Securitization
Derivative
24
How did adverse incentives affect house appraisers?
were incentivized to appraise houses as being worth less
were incentivized to appraise houses as being worth more
blacklisted if they didnt appraise houses asbeing worth more
Both A and C
25
How were war debts in Europe acontributing factor to the Great Depression?
led to high aggregate demand from Europe for US goods
It led to high inflation
It led to an oversupply of farm goods
led to low aggregate demand from Europefor US goods

Great Recession and Great Depressions Causes Flashcards | StudBud

Great Recession and Great Depressions Causes

25 termsStudBud Administration225 plays

Flashcards25 cardsFPractice quizPHost liveL

Questions 25

Answers

1
In 2004, the SEC lifted regulations on leverage ratios, how was did a problem?
It meant that banks had to start taking onless risk
It meant banks owed too much money, leading to a debt crisis
It meant banks were making too little money
banks could borrow more money to invest more in housing
2
Howdid declining lending standards contribute to the 2008 recession?
A. Itled to banks getting poorer in the short run
led to more rich people getting access to credit
A. Itled to declining housing prices
subprime borrowers getting mortgages, which bid up prices
3
How was a savings surplus in east Asia aproblem for US and European housing markets?
It led to more money going into the housing market
too little money left for people in east Asian countries
ed to less money into t-bonds, which created a debt crisis
It led to more capital back into Asia
4
The pooling of debt, for example, mortgage backed securities
Leverage
Credit Default Swap
Derivative
Securitization
5
Why were stocks overpriced?
High demand from Europe
A rapidly growing economy
Overproduction
Speculation
6
Whatrole did credit rating agencies play in the 2008 recession?
ratedgood assets as being bad, misleading investors.
were paid for by foreign governments to destroy the US
were paid for by the banks to benefit the banks
rated bad assets as being good, leading to them beingbought
7
Inability of consumers to purchase thee products produced &tariff policy led to the problemof?
overproduction in industry
Over indebtedness
underproduction in industry
overconsumption
8
An insurance policy on a stock, bond, or other asset
Leverage
Securitization
Credit Default Swap
Derivative
9
Why were surplus products produced in US factories unable to be sold inlarge amounts in Europe?
A and B
Europe Tariffs on US goods
Hitler and Mussolini didn’t believe in trade
Large war debts lowered demand in Europe
10
What percentage of Americans had no savings in the 20s?
30
100
80
0
11
Which company is most associated withcredit default swaps?
AIG
Bank of America
JP Morgan
Barclay’s
12
What’s buying stock on the margin?
Speculation
Borrowing money to invest
Buying only a little stock
Pawning goods to make money
13
Which of these were not a problem with theUS stock market during the crash in 1929?
overregulation of stocks
Stocks bought on the margin
Speculation
fraud
14
Buying risky stocks for short term profit
Derivative
Speculation
Securitization
Leverage
15
What percentage of Americans still livedon farms?
5%
50%
90%
30%
16
What was the problem with over-the-counter derivatives?
were too large & thus taking money from other markets
were over regulated, which didn’t allowfor innovation
unregulated, which led to a lack ofunderstanding of them
were too small, which didn’t allowfor more access to credit
17
How did interest rates after the tech bubble of the early2000s, contribute to the recession?
Lower interest rates led to declining lending standards
Higher rates led to less credit, thus houses more valuable
Lower interest rates led to higher mortgage rates
Higher rates led to increasing lending standards
18
How was the Federal Reserve a contributingfactor in the Great Depression?
By keeping interest rates too high in the Great Depression.
By keeping interest rates too low in the Great Depression
providing too much support tobanks,leading to bank failures
not providing enough support to banks,causing bank failures
19
Why did farmer’s income decline in the1920s?
Worldwide communist revolutions
overproduction of crops
overproduction of industrial goods
overconsumption of farming goods
20
How were bank regulators affected by adverse incentives?
Banks often chose their own regulators
Banks often had many regulators
Banks were complaining they were under regulated
Both A and B
21
Mortgage where the rate changesbased on the interestrates set by the Federal Reserve increase.
Fixed Rate Mortgage
Hybrid Mortgage
Amortization
Adjustable Rate Mortgage
22
A contract whose value stems from anotherasset or event
Leverage
Securitization
Derivative
Credit Default Swap
23
Taking on debt
Credit Default Swap
Leverage
Securitization
Derivative
24
How did adverse incentives affect house appraisers?
were incentivized to appraise houses as being worth less
were incentivized to appraise houses as being worth more
blacklisted if they didnt appraise houses asbeing worth more
Both A and C
25
How were war debts in Europe acontributing factor to the Great Depression?
led to high aggregate demand from Europe for US goods
It led to high inflation
It led to an oversupply of farm goods
led to low aggregate demand from Europefor US goods