The Great Recession: A Comprehensive Guide for Students

Question 1

What was the primary cause of the Great Recession?

Accepted Answer

Subprime mortgage crisis

Answer

Expansionary fiscal policy

Answer

Global economic growth

Answer

Financial deregulation

Question 2

Select the primary factor that led to the housing market collapse.

Accepted Answer

Foreclosures on subprime mortgages

Answer

Decline in new home sales

Answer

Increase in interest rates

Answer

Reduced demand for housing

Question 3

How did the Great Recession impact unemployment rates?

Accepted Answer

It resulted in a substantial increase in unemployment

Answer

It had minimal effect on unemployment

Answer

It led to a decline in unemployment

Answer

It affected specific sectors of the economy only

Question 4

Which reform measure was implemented in response to the Great Recession?

Accepted Answer

Dodd-Frank Wall Street Reform and Consumer Protection Act

Answer

Sarbanes-Oxley Act

Answer

Glass-Steagall Act

Answer

Financial Crisis Inquiry Commission Report

Question 5

How did the Great Recession affect the global economy?

Accepted Answer

It sparked a global economic crisis

Answer

It had little impact on other countries

Answer

It only affected developing nations

Answer

It caused a rise in global interest rates

Question 6

Which of the following statements accurately describe the Troubled Asset Relief Program (TARP) during the Great Recession?

Accepted Answer

TARP helped stabilize the financial system and prevent a worse recession.

Accepted Answer

TARP did not effectively address the problem of home foreclosures.

Accepted Answer

TARP faced criticism for its high cost.

Answer

TARP successfully boosted economic growth.

Question 7

During the years leading up to the housing market collapse, what trend did home prices exhibit?

Accepted Answer

Rapidly rising, creating a housing bubble

Answer

Remaining stable

Answer

Gradually declining

Question 8

What was a **key** element of the subprime mortgage crisis?

Accepted Answer

Loans given to borrowers with poor credit

Answer

Loans with adjustable interest rates

Answer

Loans backed by the government

Answer

Loans with no money down

Question 9

Which event generally marked the beginning of the **housing market collapse**?

Accepted Answer

Subprime mortgage default surge

Answer

Lehman Brothers bankruptcy

Answer

Bear Stearns collapse

Answer

AIG bailout

Question 10

How did securitization contribute to the subprime mortgage crisis?

Accepted Answer

Banks sold subprime mortgages to investors as AAA-rated securities.

Answer

Securitization made it harder to get subprime mortgages.

Answer

Securitization was a government bailout for banks.

Question 11

Which of the following was NOT a negative impact of the Great Recession on the global economy?

Accepted Answer

Increased international trade

Answer

Increased unemployment rates

Answer

Reduced economic growth

Question 12

What is a subprime mortgage?

Accepted Answer

A loan given to borrowers with poor credit history.

Answer

A loan given to borrowers with excellent credit history.

Answer

A loan requiring a large down payment.

Question 13

Which government action contributed to the economic recovery after the Great Recession?

Accepted Answer

Providing financial assistance to banks and homeowners

Answer

Raising interest rates to control inflation

Answer

Cutting government spending to balance the budget

Answer

Increasing taxes to generate revenue

Question 14

Which of the following was the primary goal of the Troubled Asset Relief Program (TARP)?

Accepted Answer

A. To stabilize the financial system by purchasing toxic assets

Answer

B. To provide loans to homeowners facing foreclosure

Answer

C. To create jobs and stimulate the economy

Answer

D. To regulate the banking industry

Question 15

Which sector of the economy was severely affected by the Great Recession?

Accepted Answer

B. Finance

Answer

A. Manufacturing

Answer

C. Construction

Answer

D. Education

Question 16

What was the primary reason for the government's bailout of major banks during the Great Recession?

Accepted Answer

A. To prevent a systemic financial collapse

Answer

B. To protect the savings of individual depositors

Answer

C. To stimulate economic growth

Answer

D. To punish Wall Street executives

Question 17

What were the main features of subprime mortgages?

Accepted Answer

Borrowers with poor credit, long loan terms, and high interest rates

Answer

Borrowers with good credit, short loan terms, and low interest rates

Answer

Borrowers with moderate credit, variable loan terms, and fixed interest rates

Answer

Borrowers with excellent credit, short loan terms, and adjustable interest rates

Question 18

Identify the statement that is NOT a contributory factor to the Great Recession.

Accepted Answer

Expansionary government spending

Answer

Subprime mortgage crisis

Answer

Housing market bubble

Answer

Global economic slowdown

Question 19

Identify the government agency that played a central role in overseeing the housing market during the Great Recession.

Accepted Answer

Federal Housing Finance Agency

Answer

Federal Reserve

Answer

Securities and Exchange Commission

Answer

Department of the Treasury

Question 20

How did the Great Recession impact unemployment rates in the United States?

Accepted Answer

Unemployment rates increased markedly

Answer

Unemployment rates remained unchanged

Answer

Unemployment rates declined slightly

Answer

Unemployment rates fluctuated without a clear trend

Question 21

What was the primary objective of the Troubled Asset Relief Program (TARP)?

Accepted Answer

To rescue failing banks and financial institutions

Answer

To provide loans to individuals who had lost their homes

Answer

To increase government spending on infrastructure projects

Answer

To implement stricter regulations on the housing market

Question 22

What specific event triggered the collapse of the housing market in 2007?

Accepted Answer

Defaults on subprime mortgages

Answer

Failure of Lehman Brothers

Answer

Increase in mortgage interest rates

Answer

Foreclosures

Question 23

What was the primary purpose of the Troubled Asset Relief Program (TARP)?

Accepted Answer

To provide financial assistance to struggling banks

Answer

To provide financial aid to homeowners facing foreclosure

Answer

To invest in renewable energy projects

Answer

To increase funding for social welfare programs

Question 24

How did the collapse of the housing market affect the mortgage industry?

Accepted Answer

Reduced the availability of mortgages and increased interest rates

Answer

Increased competition among lenders

Answer

Caused a shortage of mortgage brokers

Answer

Improved the quality of lending practices

Question 25

What is a subprime mortgage?

Accepted Answer

A mortgage given to a borrower with a low credit score and a high risk of default

Answer

A mortgage with a lower interest rate than a prime mortgage

Answer

A mortgage that is secured by a second home

Answer

A mortgage that is guaranteed by the government

Question 26

Which of the following was a major factor contributing to the subprime mortgage crisis? Choose the best answer.

Accepted Answer

Lax lending standards

Answer

Rising housing prices

Answer

Government deregulation of the financial industry

Answer

Declining consumer confidence

Question 27

What event is widely considered to have triggered the housing market collapse? Select the correct answer.

Accepted Answer

The downgrade of subprime mortgage-backed securities by rating agencies

Answer

The failure of Lehman Brothers

Answer

The collapse of Bear Stearns

Answer

The implementation of the Troubled Asset Relief Program (TARP)

Question 28

Which of the following factors did NOT contribute to the severity of the Great Recession? Select the best answer.

Accepted Answer

The increased foreign investment in the United States

Answer

The global financial interdependence

Answer

The lack of effective government regulation

Answer

The collapse of the subprime mortgage market

Question 29

Which regulatory failures allowed the housing market to become riskier, contributing to the Great Recession?

Accepted Answer

Lax oversight of credit-rating agencies

Accepted Answer

Unregulated financial derivatives

Answer

Strict enforcement of Glass-Steagall

Answer

Increased housing market regulations

Question 30

What event directly led to the collapse of the housing market in 2008?

Accepted Answer

Lehman Brothers investment bank filing for bankruptcy

Answer

Failure of Bear Stearns investment bank

Answer

Fall of the Dow Jones Industrial Average

Answer

Passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act

Question 31

What was the primary goal of the Troubled Asset Relief Program (TARP)?

Accepted Answer

To purchase troubled assets, such as mortgage-backed securities, from banks

Answer

To provide direct financial assistance to homeowners facing foreclosure

Answer

To lower interest rates and stimulate lending

Answer

To provide tax cuts to businesses and individuals

Question 32

Which government agency was primarily responsible for overseeing the Troubled Asset Relief Program?

Accepted Answer

Department of the Treasury

Answer

Federal Reserve

Answer

Securities and Exchange Commission

Answer

Federal Deposit Insurance Corporation

Question 33

What was a significant consequence of the Great Recession?

Accepted Answer

Decreased trust in financial institutions

Answer

Increased trust in financial institutions

Answer

Increased trust in government regulation of the financial industry

Answer

Had no significant impact on public confidence

Question 34

The Troubled Asset Relief Program (TARP) was primarily intended to:

Accepted Answer

Stabilize the financial system

Answer

Assist homeowners facing foreclosure

Answer

Stimulate economic growth

Answer

Create employment opportunities

Question 35

What is the term for the process of combining numerous loans into a single investment?

Accepted Answer

Securitization

Answer

Loan transfer

Answer

Loan insurance

Answer

Loan modification

Question 36

Which of the following accurately defines quantitative easing?

Accepted Answer

Central bank purchases of government bonds

Answer

Central bank reduction of interest rates

Answer

Government tax increases

Answer

Government spending cuts

Question 37

The purpose of the Dodd-Frank Wall Street Reform and Consumer Protection Act was to:

Accepted Answer

Reform the financial industry in response to the Great Recession

Answer

Regulate the housing market more stringently

Answer

Provide relief to homeowners facing foreclosure

Answer

Stimulate economic growth

Question 38

Who held the office of President of the United States during the Great Recession?

Accepted Answer

Barack Obama

Answer

George W. Bush

Answer

Donald Trump

Answer

Joe Biden

Question 39

In what year did the Great Recession officially commence?

Accepted Answer

2007

Answer

2008

Answer

2009

Answer

2010

Question 40

What is considered the primary cause of the Great Recession?

Accepted Answer

The subprime mortgage crisis

Answer

Government overspending

Answer

Rising interest rates

Answer

A decline in consumer confidence

Question 41

What was the name of the government program designed to help banks during the Great Recession?

Accepted Answer

Troubled Asset Relief Program (TARP)

Answer

Securities and Exchange Commission (SEC)

Answer

The Federal Reserve

Answer

Federal Deposit Insurance Corporation (FDIC)

Question 42

What is the best description of the subprime mortgage crisis?

Accepted Answer

Mortgages were given to people with poor credit and limited income, making the loans riskier.

Answer

Mortgages were only given to people with no income.

Answer

Mortgages were only given to people with good credit and high income.

Answer

Mortgages were given at extremely low interest rates, making them affordable for everyone.

Question 43

Which of the following is NOT a lesson learned from the Great Recession?

Accepted Answer

Government should never intervene in the economy

Answer

Banks should be more responsible with lending

Answer

Strong financial regulations are important

Answer

Consumers should be more careful with debt

Question 44

What was a key government response to the Great Recession?

Accepted Answer

Quantitative easing, where the Federal Reserve bought bonds to lower interest rates

Answer

Raising the minimum wage

Answer

Deregulating the financial industry

Answer

Increasing tariffs

Question 45

Which of the following was a major consequence of the Great Recession?

Accepted Answer

High unemployment rates across the country

Answer

Rising inflation

Answer

Increased housing affordability

Answer

Increased consumer spending

Question 46

What was a key difference between the Great Recession and previous economic downturns?

Accepted Answer

Its global impact, affecting economies worldwide

Answer

Its severity

Answer

Its duration

Question 47

Who was the US President at the beginning of the Great Recession?

Accepted Answer

George W. Bush

Answer

Bill Clinton

Answer

Barack Obama

Question 48

Which of the following was NOT a factor that contributed to the housing market collapse that triggered the Great Recession?

Accepted Answer

Stricter lending standards

Answer

Overbuilding of homes

Answer

Falling home prices

Answer

Subprime mortgages

Question 49

What is quantitative easing?

Accepted Answer

A monetary policy tool involving the purchase of long-term government bonds

Answer

A fiscal policy tool involving increased government spending

Answer

A regulatory policy aimed at preventing future financial crises

Question 50

Which of the following is a way to prevent a future financial crisis similar to the Great Recession?

Accepted Answer

Strengthening financial regulations

Answer

Raising interest rates

Answer

Deregulating the financial industry