Financial Crisis Inquiry Commission

The 2008 financial crisis only affected the United States.

• True

• False

Answer explanation

The impact of the 2008 financial crisis was severe and far-reaching on a global scale.

FCIC Report help us understand the complexity and impact of the finanacial crises more broadly.

• True

• False

In the process of losing control, the increase in demand and the decrease in supply had a significant impact.

• True

• False

Answer explanation

It was the increase in supply but a decrease in demand, not the other way around.

The U.S. Federal Reserve lowered interest rates to 1% to stimulate the economy, which led to banks borrowing more easily.

• True

• False

The boom in subprime lending resulted from a high demand for mortgage-backed securities (MBS), which in turn led to a relaxation of lending standards and a surge in lending to individuals with poor credit.

• True

• False

The term 'Shadow Banking' refers to the traditional banking sector where all banking activities take place within the regulatory oversight.

• True

• False

Answer explanation

Shadow Banking does not refer to the traditional banking sector, but financial activities that take place outside the realm of regulatory oversight. This includes entities and activities that perform banking functions but are not regulated as banks.

Deregulation allowed large banks to take on more risk, and the lack of transparency in complex financial products masked the level of risk.

• True

• False

Wealth wiped out by the financial crisis almost reached the amount lost in the dot-com bubble crash of 2000.

• True

• False

Answer explanation

It was higher than the amount lost in the dot-com bubble crash.

The underemployment problem of America fully recovered after the nation officially emerged out of the recession in June 2009.

• True

• False

Answer explanation

26.2 million Americans were still looking for full-time work in November 2010.

Banks begun to restrict access to credit even for large and medium sized companies.

• True

• False