Question 1

Subprime loans that helped cause the financial crisis included&#10;A) adjustable-rate mortgages.&#10;B) sovereign wealth funds.&#10;C) hedge funds.&#10;D) A and B

Accepted Answer

Subprime loans that helped cause the financial crisis mostly included adjustable-rate mortgages, which allowed borrowers to initially pay lower interest rates but then faced higher rates in the future, leading to defaults and foreclosures. Sovereign wealth funds and hedge funds were not directly involved in the subprime loan crisis.

Question 2

Globally, a major impact of the 2008-2009 financial crisis is&#10;A) a global power shift, in which some countries emerged stronger than the United States, Western Europe, and Japan.&#10;B) the creation of a European Union.&#10;C) a new nuclear disarmament treaty.&#10;D) the Glass-Steagall Treaty.

Accepted Answer

The financial crisis led to a global power shift, with emerging economies such as China and India becoming stronger and challenging the dominance of the United States, Western Europe, and Japan. This shift was driven by factors such as rising economic growth in emerging markets, an increased focus on resource nationalism, and declining confidence in Western institutions and economic models.

Question 3

Which of the following were precursors to the 2008-2009 financial crisis?&#10;A) Excessive financial pessimism&#10;B) Economic globalization&#10;C) American isolationism&#10;D) Dramatic reduction in U.S. government debt

Accepted Answer

Economic globalization allowed for the spread of financial contagion and increased interconnectedness between financial institutions around the world, contributing to the severity of the crisis. Excessive financial pessimism and American isolationism were not direct precursors to the crisis, and there was not a dramatic reduction in U.S. government debt leading up to the crisis.

Question 4

High interest rates were a cause of the global financial crisis of 2008-2009.

Accepted Answer

High interest rates were not a cause of the global financial crisis of 2008-2009. Rather, it was factors such as subprime lending, housing market bubble, and excessive risk-taking by banks and financial institutions that led to the crisis.

Question 5

In response to the financial crisis, the United States&#10;A) renewed its commitment to financial liberalization.&#10;B) poured billions of dollars into credit markets and banks to restore confidence.&#10;C) clearly stated that there was no similarity to the Great Depression of the 1930s.&#10;D) failed to reach consensus between Republicans and Democrats about how to proceed.

Accepted Answer

The United States responded to the financial crisis by pouring billions of dollars into credit markets and banks in order to restore confidence. This was done through programs such as the Troubled Asset Relief Program (TARP) and the Federal Reserve's quantitative easing measures.

Question 6

President Lyndon B. Johnson believed in limiting the role of government and took steps in the 1980s that increased financial deregulation and promoted financial globalization.

Accepted Answer

The statement is incorrect. President Lyndon B. Johnson served from 1963-1969, not the 1980s. Additionally, he believed in an expanded role for government in areas such as civil rights and poverty reduction. Financial deregulation and globalization became more prominent in the 1980s under President Ronald Reagan.

Question 7

The financial crisis of 2008-2009&#10;A) had a positive impact on economies in Western Europe.&#10;B) affected little more than trade.&#10;C) was partly caused by the costly war on terror and increased globalization.&#10;D) was partly caused by the &#34;Occupy Wall Street&#34; protests.

Accepted Answer

The financial crisis of 2008-2009 was caused by a variety of factors, including expensive and ongoing wars, increased globalization, and the housing bubble. The war on terror was a significant contributor, as it required vast amounts of government spending and contributed to a growing budget deficit. Additionally, the effects of globalization, such as outsourcing jobs and deregulation, also played a role.

Question 8

Hedge funds enabled wealthy investors to avoid some financial regulations in global markets.

Accepted Answer

Hedge funds are generally only available to wealthy investors and often operate outside of traditional financial regulations, allowing investors to potentially make larger returns and avoid some regulatory restrictions.

Question 9

Prior to the financial crisis, the chairman of the U.S. Federal Reserve, who kept interest rates low to increase the availability of money, was&#10;A) Simon Johnson.&#10;B) Henry Paulson.&#10;C) Freddie Mac.&#10;D) Alan Greenspan.

Accepted Answer

Alan Greenspan served as chairman of the U.S. Federal Reserve from 1987 to 2006, including the period leading up to the financial crisis of 2008. He is known for keeping interest rates low in order to stimulate economic growth, which some argue contributed to the housing bubble and subsequent financial collapse.

Question 10

Credit default swaps were&#10;A) an unregulated financial innovation that helped create the financial crisis by transferring credit risks away from banks.&#10;B) low-interest credit cards created by the U.S. Federal Reserve Bank.&#10;C) a part of the war against terrorism.&#10;D) a form of real estate &#34;flipping.&#34;

Accepted Answer

Credit default swaps were a form of financial innovation that allowed banks to transfer credit risks to third parties. They were largely unregulated, and their use contributed to the buildup of risky investments that ultimately led to the financial crisis of 2008.

Question 11

American real estate foreclosures in the financial crisis&#10;A) were rarely seen due to quick action by the U.S. government.&#10;B) spread quickly and were associated with many facets of America's financial decline.&#10;C) helped increase real estate values.&#10;D) had little effect.

Accepted Answer

The answer of American real estate foreclosures in the financial...

Question 12

Fannie Mae and Freddie Mac&#10;A) were a fictitious American couple used by the media as an example of overspending.&#10;B) were U.S. government corporations that made more money available to lenders and borrowers preceding the crisis by selling loans to investors.&#10;C) were agencies that warned the public about the dangers of subprime loans before the crisis.&#10;D) were corporations that requested loans from the European Union to stabilize Ireland's failing economy.

Accepted Answer

The answer of Fannie Mae and Freddie Mac&#10;A) were a...

Question 13

The Federal Deposit Insurance Corporation (FDIC)destroyed Americans' confidence in banks.

Accepted Answer

The answer of The Federal Deposit Insurance Corporation (FDIC)destroyed Americans'...

Question 14

In the lead-up to the 2008-2009 crisis, the Securities and Exchange Commission&#10;A) tightened its regulation of investment banking.&#10;B) restricted the movement of capital across borders.&#10;C) decreased regulatory enforcement of the banking industry.&#10;D) updated regulations to keep up with financial innovations.

Accepted Answer

The answer of In the lead-up to the 2008-2009 crisis,...

Question 15

Following September 11, 2001, a new globalization agenda, as part of a security strategy, freed American companies from restraints imposed by countries in which they were operating.

Accepted Answer

The answer of Following September 11, 2001, a new globalization...

Question 16

India largely avoided the global financial crisis because&#10;A) its Reserve Bank had taken a conservative approach and rejected many financial innovations.&#10;B) the country was protected by its geographic distance from the United States.&#10;C) real estate development is unknown in India.&#10;D) of the country's close relationship with Japan.

Accepted Answer

The answer of India largely avoided the global financial crisis...

Question 17

Europeans in general took a less frantic approach to the 2008-2009 financial crisis than Americans because&#10;A) their governments had created numerous safety nets, including national health insurance and generous pensions.&#10;B) home ownership is rare in Europe.&#10;C) Europeans have a very low rate of saving.&#10;D) they are not part of the global financial community.

Accepted Answer

The answer of Europeans in general took a less frantic...

Question 18

China's response to the financial crisis was&#10;A) to seek loans from the United States.&#10;B) to take measures to strengthen its power vis-&#224;-vis the United States.&#10;C) to ratchet down its manufacturing activity.&#10;D) to resist pressure to create a stimulus package.

Accepted Answer

The answer of China's response to the financial crisis was&#10;A)...

Question 19

Efforts to establish global banking regulations through the Basel accords demonstrate&#10;A) domestic regulatory reforms would be more effective than global regulations.&#10;B) the United States is fully supportive of global banking regulations.&#10;C) global banking regulations are highly effective.&#10;D) B and C

Accepted Answer

The answer of Efforts to establish global banking regulations through...

Question 20

The amount of money earned by some American executives&#10;A) was in no way a cause of the financial crisis.&#10;B) was regulated by the government before the financial crisis.&#10;C) has played a pivotal role in creating the crisis and in its aftermath.&#10;D) A and B

Accepted Answer

The answer of The amount of money earned by some...

Question 21

Discuss how deregulation of financial markets and low interest rates contributed to creating the financial crisis.

Accepted Answer

The answer of Discuss how deregulation of financial markets and...

Question 22

Discuss the implications of the stimulus package for the United States. In light of the benefits derived from Europe's safety net, discuss the pros and cons of America's adoption of European policies, such as universal health care and job protection.

Accepted Answer

The answer of Discuss the implications of the stimulus package...

Question 23

India, China, Brazil, Russia, and South Africa are collectively known as the _______________________________ countries.

Accepted Answer

The answer of India, China, Brazil, Russia, and South Africa...

Question 24

The Asian financial crisis of 1997 was one precursor to the 2008-2009 global financial crisis.

Accepted Answer

The answer of The Asian financial crisis of 1997 was...

Question 25

In the run-up to the crisis, a belief in unending prosperity and a herd mentality fostered excessive risk taking called______________________________.

Accepted Answer

The answer of In the run-up to the crisis, a...

Question 26

The BRIC countries enhanced their power in relation to the United States as a result of the global financial crisis.

Accepted Answer

The answer of The BRIC countries enhanced their power in...

Question 27

______________________________ refer to credit given to individuals who fail to meet rigorous standards usually expected by lending institutions.

Accepted Answer

The answer of ______________________________ refer to credit given to individuals...

Question 28

Hedge funds were one of the largely unregulated new practices called _______________________that led to the 2008-2009 financial crisis.

Accepted Answer

The answer of Hedge funds were one of the largely...

Question 29

Financial innovations like securitization and hedge funds came along with many new government regulations to keep them in check, which is why they were not a cause of the financial crisis.

Accepted Answer

The answer of Financial innovations like securitization and hedge funds...

Question 30

Decreasing enforcement by the Securities and Exchange Commission is a deregulatory policy.

Accepted Answer

The answer of Decreasing enforcement by the Securities and Exchange...

Question 31

___________________________________ is the process whereby a bank takes possession of a house because the owner is unable to pay the mortgage.

Accepted Answer

The answer of ___________________________________ is the process whereby a bank...

Question 32

The power of investment bankers grew after the 1999 demise of the ______________________, which had prohibited commercial banks from marketing securities.

Accepted Answer

The answer of The power of investment bankers grew after...

Question 33

Parties involved in a ______________________________agreed that one would pay the other if a particular borrower, a third party, could not repay its loan.

Accepted Answer

The answer of Parties involved in a ______________________________agreed that one...

Question 34

Bundling loans into securities that are sold to investors is called _____________________.

Accepted Answer

The answer of Bundling loans into securities that are sold...

Question 35

The head of the U.S. Federal Reserve was in favor of more regulation of the financial sector after the financial crisis.

Accepted Answer

The answer of The head of the U.S. Federal Reserve...

Question 36

___________________________ is the practice of owning a house for a short period with the sole intention of selling it quickly for a higher price to make a significant profit.

Accepted Answer

The answer of ___________________________ is the practice of owning a...

Question 37

In your view, has the financial crisis weakened the United States globally and strengthened&#10;China? Discuss.

Accepted Answer

The answer of In your view, has the financial crisis...

Question 38

Integral to hedge funds is a technique called _______________________________, which means simultaneously buying funds at a lower price in one market and selling at a higher price in another market to make a profit.

Accepted Answer

The answer of Integral to hedge funds is a technique...

Question 39

Discuss the role of subprime loans in real estate in the financial crisis and their broader social and economic implications.

Accepted Answer

The answer of Discuss the role of subprime loans in...

Question 40

Evaluate the global responses to the financial crisis. Give examples.

Accepted Answer

The answer of Evaluate the global responses to the financial...

Question 41

Match between columns&#10;                        Premises: Bets on the creditworthiness of a particular company, like insurance on a loan, are called ____________________________.&#10;Bets on the creditworthiness of a particular company, like insurance on a loan, are called ____________________________.&#10;Bets on the creditworthiness of a particular company, like insurance on a loan, are called ____________________________.&#10;Bets on the creditworthiness of a particular company, like insurance on a loan, are called ____________________________.&#10;Bets on the creditworthiness of a particular company, like insurance on a loan, are called ____________________________.&#10;________________________opened the banks around the world to competition.&#10;________________________opened the banks around the world to competition.&#10;________________________opened the banks around the world to competition.&#10;________________________opened the banks around the world to competition.&#10;________________________opened the banks around the world to competition.&#10;___________________ were created by countries to save and recycle surplus revenues.&#10;___________________ were created by countries to save and recycle surplus revenues.&#10;___________________ were created by countries to save and recycle surplus revenues.&#10;___________________ were created by countries to save and recycle surplus revenues.&#10;___________________ were created by countries to save and recycle surplus revenues.&#10;____________________was money allocated by governments to financial institutions and industry to prevent their collapse and restore growth.&#10;____________________was money allocated by governments to financial institutions and industry to prevent their collapse and restore growth.&#10;____________________was money allocated by governments to financial institutions and industry to prevent their collapse and restore growth.&#10;____________________was money allocated by governments to financial institutions and industry to prevent their collapse and restore growth.&#10;____________________was money allocated by governments to financial institutions and industry to prevent their collapse and restore growth.&#10;_______________________ prohibited commercial banks from underwriting or marketing securities.&#10;_______________________ prohibited commercial banks from underwriting or marketing securities.&#10;_______________________ prohibited commercial banks from underwriting or marketing securities.&#10;_______________________ prohibited commercial banks from underwriting or marketing securities.&#10;_______________________ prohibited commercial banks from underwriting or marketing securities.

Accepted Answer

The Answer of global financial liberalization and stimulus package and is...

Deck 7: The Global Financial Crisis