Asked by Sukhi Malhi on Jun 13, 2024
Verified
The housing bubble prior to 2007 was driven primarily by
A) the large population growth stemming from legal and illegal immigration between
1990 and 2005.
B) the increased demand for housing that resulted from a dramatic loosening of lending standards.
C) innovations in construction technology that allowed for new homes to be built at drastically reduced costs.
D) the federal government's decision to quadruple the mortgage interest deduction in 2003.
Housing Bubble
A period characterized by rapid increases in property valuations based on speculative demand rather than underlying fundamentals, leading to a market correction when the bubble bursts.
Lending Standards
The criteria used by financial institutions to determine the eligibility of borrowers for loans, including creditworthiness and the ability to repay.
Mortgage Interest Deduction
A tax deduction for mortgage interest paid on the first $750,000 of a mortgage debt for a primary or secondary home, aimed at incentivizing homeownership.
- Comprehend the factors and implications of the 2007 and 2008 housing crisis.
Verified Answer
Learning Objectives
- Comprehend the factors and implications of the 2007 and 2008 housing crisis.
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