What was one of the main causes of the 2007–2008 financial crisis in the United States?
A. High taxes on foreign trade
B. Overuse of renewable resources
C. Widespread approval of subprime mortgages
D. Strict regulation of investment banks
Answer (2)
The correct answer is letter C. Widespread approval of subprime mortgagesOne major reason the financial crisis happened in 2007–2008 was because many banks gave subprime mortgages, which are home loans given to people who were not likely to pay back their debts on time. These people had low income or poor credit history. Banks approved their loans anyway because they wanted to earn more money quickly. This caused a big problem when many people failed to pay their loans. Eventually, house prices dropped, and many homes were worth less than the amount borrowed. This affected not just the U.S. economy but also spread to other countries like those in Asia that were connected through global trade and finance.
Answer:C. Widespread approval of subprime mortgages.
