During the Great Recession,a major financial crisis followed the collapse of housing prices,which led to
A) a decrease in the money supply by the Federal Reserve.
B) the decline in the health of many large financial firms and banks.
C) skyrocketing oil prices.
D) an increase in income tax rates to shrink the federal budget deficit.
E) an increase in expected income.

Question

Quizplus · Accepted Answer

The collapse of housing prices led to the decline in the health of many large financial firms and banks, including the bankruptcy of Lehman Brothers, which triggered the wider financial crisis. This resulted in a credit crunch, where banks were unable or unwilling to lend to each other, and a sharp decline in stock markets and economic activity. None of the other options listed have direct links to the housing market collapse that triggered the Great Recession.

During the Great Recession,a Major Financial Crisis Followed the Collapse