QQuestionBusiness Law
QuestionBusiness Law
Which was a cause of the Great Recession of 2007 to 2009?
A. Internet companies being overvalued, creating a bubble
B. People buying stock on margin
C. A highly unequal distribution of wealth
D. Banks taking too many risks in authorizing mortgages
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Answer
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Step 1:Let's solve this step by step:
Step 2:: Understand the Context
The Great Recession was a significant economic downturn that occurred between 2007 and 2009, causing widespread financial instability and economic hardship in the United States and globally.
Step 3:: Analyze the Options
A. Internet companies being overvalued - This describes the dot-com bubble of the late 1990s/early 2000s - Not related to the 2007 - 2009 recession B. People buying stock on margin - While margin buying can create financial risks, this was not the primary cause of the 2007 - 2009 recession C. A highly unequal distribution of wealth - Income inequality was a background factor - Not the direct cause of the recession D. Banks taking too many risks in authorizing mortgages - This is the most accurate description of a key cause of the Great Recession
Step 4:: Detailed Explanation of the Mortgage Crisis
The recession was primarily triggered by: - Banks issuing high-risk subprime mortgages - Lending to borrowers who could not realistically repay loans - Creating complex financial derivatives based on these risky mortgages - A housing market bubble that eventually collapsed
Final Answer
Banks taking too many risks in authorizing mortgages
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