Answer to Question 1
Answer: An ideal response will:
1. Outline the factors that contributed to the recent financial recession, including the collapsing mortgage industry and the investment crisis.
2. Illustrate how these two factors created slowdowns in construction, growing government expenditures, and losses of jobs that sparked a domino effect that rippled throughout the U.S. economy.
3. Connect how the efforts to deregulate certain sectors of the financial industry, specifically investment banking, created conditions under which banks took higher risks.
4. Lay out a specific course of action that would minimize these effects in the future, including efforts to reregulate the financial and housing sectors, or alternately argue why government should not guarantee against risk.
Answer to Question 2
Answer: An ideal response will:
1. Discuss the beginnings of the regulatory movement in the nineteenth century, noting its origins in anti-trust legislation.
2. Note that these regulations were designed to prevent monopolistic business practices by so-called trusts.
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