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Author Question: Which of the following would not shift the production possibilities curve in an inward direction? ... (Read 21 times)

codyclark

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on: Jun 30, 2018
Which of the following would not shift the production possibilities curve in an inward direction?
 a. a sharp increase in the unemployment rate
 b. a decrease in the capital stock
 c. land is contaminated due to a nuclear meltdown
 d. a devastating war destroys both property and people

Question 2

List the various reasons that contributed to the financial crisis that occurred in 2008.


angrybirds13579

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Reply #1 on: Jun 30, 2018
Answer to Question 1

a

Answer to Question 2

Low interest rates from 2002 to 2004 caused excessive borrowing. Deregulation in the mortgage industry and lower standards by Fannie Mae and Freddy Mac led to the significant amount of sub-prime mortgages to borrowers who could not afford to make payments when interest rates increased in 2006 . With limited down payments and decreasing home values, some owners walked away from their homes leading to more foreclosures and a further decline in the housing market. These mortgages were then bundled and sold to investors; this leveraging concentrated the risk which was not rated correctly by agencies like Moody's and S&P.


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