The housing bubble that began building in 2001 was primarily the result of

Question

Quizplus · Accepted Answer

Low interest rates and increased liquidity provided by the Federal Reserve created an environment in which more people could afford to buy homes, which increased demand and prices. This, in turn, led to a housing bubble as people began taking out risky loans to purchase homes they could not afford. The bubble burst in 2008, leading to a widespread financial crisis.

Option A is incorrect because the availability of low-cost affordable homes does not necessarily lead to a housing bubble. Option C is incorrect because although changes in income tax policy may have encouraged more people to buy homes, this was not the primary cause of the housing bubble. Option D is incorrect because while international investors may have played a role in the housing market, they were not the primary cause of the housing bubble.

The Housing Bubble That Began Building in 2001 Was Primarily