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Macroeconomics

Question Description

I don’t understand this question and need help to study.

Special Topic: The crisis of 2008- I was needing help with the following questions.  Answered as questions and not in essay format. 

Critical Analysis

1) Why did housing prices rise rapidly during 2002-2005?  Why did the mortgage default rate increase so sharply during 2006 and 2007 even before the 2008-2009 recession began? 

2) What happened to the credit standards (e.g. minimum down payment, mortgage loan relative to the value of the house, and creditworthiness of the borrower) between 1995 and 2005?  Why did the credit standards change?  How did this influence the housing price bubble and later the default and foreclosure rates? 

4) When did mortgage default and housing foreclosure rates begin to rise rapidly?  When did the economy go into recession?  Was there a causal relationship between the two?  Discuss.

6) Some charge that the Crisis of 2008 was caused by the “greed” of Wall Street firms
and other bankers.  Do you agree with this view?  Do you think there was more greed on Wall Street in the first five years of this century than during the 1980’s and 1990’s?  Why or why not?


 

 



 

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Final Answer

henryprofessor (74672)
Purdue University

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