Exploring the 2008 Financial Crisis and Its Aftermath

The video explores the 2008 financial crisis, detailing its causes, including sub-prime mortgages and the housing bubble. It discusses the government's response, such as TARP and the Dodd-Frank Act, and highlights lessons learned, like the dangers of perverse incentives and moral hazard. The crisis was exacerbated by human errors and regulatory failures, leading to widespread economic impact.

Who said the 2008 Financial Crisis could have led to a global meltdown similar to the 1930s?

• Jacob Clifford

• Ben Bernanke

• Adrienne Hill

• Alan Greenspan

What happens when a homeowner defaults on their mortgage?

• The holder of the mortgage gets the house

• The homeowner has to sell the house

• The bank increases the interest rate

• The mortgage is forgiven

What are mortgage-backed securities?

• Pools of mortgages sold to investors

• Government bonds backed by mortgages

• Securities that guarantee mortgage payments

• Loans given to buy securities

What led to the increase in housing prices in the 2000s?

• Decrease in interest rates

• Neither A nor B

• Increase in global investment

• Both A and B

What was a major consequence of the housing bubble bursting?

• Increase in home prices

• Stabilization of the housing market

• Decrease in mortgage defaults

• Increase in mortgage defaults

What was the purpose of TARP?

• To regulate mortgage lending

• To bail out banks and other institutions

• To lower interest rates

• To increase housing prices

What did the Dodd-Frank law aim to improve?

• Consumer protection and financial transparency

• The availability of sub-prime mortgages

• The profitability of banks

• Investment in the housing market

What is a 'perverse incentive' as discussed in the video?

• An incentive that reduces risk

• An incentive that has unintended negative consequences

• A financial reward for government officials

• A bonus for high-performing employees

What does 'moral hazard' refer to in the context of the financial crisis?

• The hazard of lending to immoral individuals

• Government regulation of morality

• Risks borne by others due to one's actions

• Ethical banking practices

According to the financial crisis inquiry commission, what was a major cause of the crisis?

• Lack of regulation and oversight

• Too much government intervention

• The resilience of the housing market

• The stability of mortgage-backed securities