4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have a higher likelihood of default. They are made to people with relatively poor credit history. They are made to people with relatively few assets. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. Which of the following contributed to the growth of these mortgages? Check all that apply. Decreased regulation of the financial sector A shift to lower-risk investments by investors The Federal Reserve setting low interest rates in the early part of the 2000s The expectation that housing prices would keep rising

4. The subprime mortgage market The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States. Subprime mortgages have which of the following characteristics? Check all that apply. They have a higher likelihood of default. They are made to people with relatively poor credit history. They are made to people with relatively few assets. Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. Which of the following contributed to the growth of these mortgages? Check all that apply. Decreased regulation of the financial sector A shift to lower-risk investments by investors The Federal Reserve setting low interest rates in the early part of the 2000s The expectation that housing prices would keep rising

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

On the graph, show the primary effect of an expansion of the mortgage market on the housing market. Shift the demand curve or the supply curve for
housing.
Note: Select and drag one or both of the curves to the desired position. Curves will snap into position, so if you try to move a curve and it snaps back
to its original position, just drag it a little farther.
PRICE OF HOUSING
QUANTITY OF HOUSING
Supply
Demand
The expansion in the mortgage market resulted in
a decrease
an increase
Demand
Supply
(?)
in the price for housing.

4. The subprime mortgage market
The financial crisis started with defaults-borrowers not repaying their loans-on subprime mortgages in the United States.
Subprime mortgages have which of the following characteristics? Check all that apply.
They have a higher likelihood of default.
They are made to people with relatively poor credit history.
They are made to people with relatively few assets.
Subprime mortgages expanded to about 35% of all mortgages issued in the United States in 2004. Which of the following contributed to the growth of
these mortgages? Check all that apply.
Decreased regulation of the financial sector
A shift to lower-risk investments by investors
The Federal Reserve setting low interest rates in the early part of the 2000s
The expectation that housing prices would keep rising

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Step 1: Defining Mortgages.

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