Credit markets froze because interest rates were so low that banks thought it was not worth it to lend to each other.

Question

Quizplus · Accepted Answer

Credit markets froze in 2008 because banks were hesitant to lend to each other due to the high risk of default on mortgages and other loans. This led to a lack of liquidity in the markets and a credit crunch. Interest rates were not the primary cause of the freeze, although they did play a role in exacerbating the crisis.

Credit Markets Froze Because Interest Rates Were So Low That