Author Question: Why did the fall in housing prices lead to bank failures in the U.S. during 2007-2009? What will ... (Read 118 times)

mspears3 · **on:** Jun 30, 2018

Why did the fall in housing prices lead to bank failures in the U.S. during 2007-2009?

What will be an ideal response?

Question 2

The table above gives information about the economy of Spain. If the growth rate in 1998 is maintained, real GDP will double in ________ years.

A) 10 B) 18 C) 19 D) 4 E) 25

stanleka1 · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Falling housing prices led to mortgage delinquencies during 2007-2009. Many people stopped making payment for their mortgages either because they did not have money to pay or because they realized that it was not optimal to keep paying interest on a mortgage that vastly exceeded the value of the home. As a result, the number of home foreclosures increased and banks had no way of recouping the money as the foreclosed houses had to be sold at prices much below their original value.

Answer to Question 2

B