Question

What significant event occurred in 2008 and became the catalyst for what is considered the worst recession in the U.S. and throughout the world since the Great Depression?
A)the decline of the housing market
B)the terrorist attack on the World Trade Center
C)the beginning of the Persian gulf war

Answer 1

The correct answer is A, the housing market collapsed due to subprime mortgages.

Answer 2

Answer:

The correct answer is A. The event that occurred in 2008 and became the catalyst for what is considered the worst recession in the US and throughout the world since the Great Depression was the decline of the housing market.

Explanation:

The crisis was to a large extent initiated by a stagnating housing market in the United States and because the bundled mortgages in the lowest segment (subprime) packaged as bonds were rapidly losing value. As a result, financial institutions ran into problems and hundreds of billions were eventually written off on purchased bonds. Because it was unclear which institutions would get into trouble as a result, the interbank money market dried up, banks no longer lent each other money. Several banks had been nationalized, gone bankrupt or taken over. Negative developments in different market segments reinforced each other, starting the Great Recession.