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How Did the Collapse of the Housing Bubble Cause a Supply-Side

Question 81

Multiple Choice

How did the collapse of the housing bubble cause a supply-side driven contraction in output?


A) Because banks were unwilling to lend, many businesses were suddenly unable to access credit for their day-to-day needs.
B) When homeowners lost value in their homes, they stopped saving, which reduced banks' ability to lend.
C) Because consumers lost confidence in the banking industry, they stopped depositing money, so banks could no longer lend.
D) Banks wanted to make loans, but couldn't find any credit-worthy customers to loan to.

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