Understanding the Financial Crisis of 2008

What was the initial trigger of the crisis described in the text?

• A stock market crash

• A mortgage crisis

• A technology bubble burst

• A global pandemic

What was the primary cause of the financial crisis according to the text?

• International trade imbalances

• Natural disasters

• Greed and incompetence on Wall Street

• Government policy failures

What role did credit default swaps play in the financial crisis?

• They improved credit ratings of companies

• They helped stabilize the financial markets

• They were central to the crisis

• They were irrelevant to the financial situation

Who was primarily blamed for creating the disastrous financial instruments?

• Government regulators

• Environmentalists

• Mathematicians and physicists

• Economists

What was a significant problem with the credit default swaps?

• They were over-regulated

• They were essentially unregulated and lacked capital reserves

• They were fully transparent and well understood

• Sellers were required to have capital reserves

Which companies were mentioned as selling credit default swaps?

• Walmart and Target

• Google and Amazon

• Apple and Microsoft

• Bear Stearns, Lehman Brothers, and AIG

What was the estimated size of the market for credit default swaps?

• $10 trillion

• $25 trillion

• $100 trillion

• $60 trillion

Investors who buy stocks on credit are known as

• debtors

• speculators

• fools

• venture capitalists

When too many people attempt to withdraw their money from a bank in fear that the bank will collapse, it is called a _______.

• withdrawal panic
• bank run
• margin call
• investment ladder

Which regulatory body was criticized for not foreseeing the financial crisis?

• Securities and Exchange Commission

• Federal Reserve

• Department of Treasury

• Consumer Financial Protection Bureau