Subprime borrowers ________.
A) are those individuals who owe more on their mortgage than the value of their home
B) possess a relatively low FICO score
C) rely on mortgage-backed securities to support their mortgage applications
D) are those with an income level below the value of their mortgage
Question 2
An important reason why Ricardian equivalence may fail is if
A) borrowing and lending are done through intermediaries.
B) government debt incurred today may not be paid off until after some current consumers are deceased.
C) state and local governments also engage in debt finance.
D) some consumers are borrowers, while other consumers are lenders.
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