Which faulty assumption by banks led to the Great Recession that began in 2007?
A) that inflation would always remain low
B) that the U.S.government would always pay its debts
C) that stock prices would never drop
D) that the dollar would always be strong against other currencies
E) that real estate prices would always rise

Question

Quizplus · Accepted Answer

The faulty assumption by banks that real estate prices would always rise led them to give out risky loans and investments, which eventually resulted in a housing bubble and the collapse of the housing market. This, in turn, triggered the Great Recession.

Which Faulty Assumption by Banks Led to the Great Recession