In contrast to the dot-com stock market bubble, the bursting of the housing bubble ________, implying ________.
A) affected almost every financial institution; the risk was well diversified
B) affected a small number of investors; the risk was not well diversified
C) hurt every household; households paid too high an interest rate
D) was attenuated by a quick response by the Fed; the Fed's policy was effective
E) increased household expenditures; it had little effect on the macroeconomy

Question

Quizplus · Accepted Answer

The bursting of the housing bubble affected a small number of investors who were heavily involved in the housing market, leading to a notable lack of diversification of risk. In contrast, the dot-com stock market bubble affected a wide range of investors, suggesting that risk was more broadly spread across different institutions.

In Contrast to the Dot-Com Stock Market Bubble, the Bursting