Practice question · Sort into groups
Sort each factor: did it cause the crisis or respond to it?
Groups: Caused the crisis · Responded to the crisis
- TARP bank bailouts
- Excessive leverage in banks
- Subprime lending to unqualified borrowers
- Quantitative easing
- Opaque securitisation and inflated ratings
Hints
- Ask whether the item came before the collapse or after it.
- Liquidity injections were a response, not a cause.
Show the answer
Caused the crisis: Excessive leverage in banks, Subprime lending to unqualified borrowers, Opaque securitisation and inflated ratings
Responded to the crisis: Quantitative easing, TARP bank bailouts
Why
Leverage, subprime lending, and opaque securitisation caused it. QE and bailouts responded to it, applying Depression-era lessons to prevent total collapse.
Practise The Global Financial Crisis
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More questions on The Global Financial Crisis
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- Match each GFC concept to its meaning.