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Question 38
During the crisis of 2008 housing prices
(1) rose sharply; rose sharply
(2) fell sharply; fell sharply
(3) fell sharply; rose sharply
(4) rose sharply; fell sharply

Ask by O'Quinn Frazier. in Cayman Islands
Mar 31,2025

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The correct answer is (2) fell sharply; fell sharply.

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During the 2008 financial crisis, the housing market faced a significant downturn, leading to a dramatic drop in housing prices. This was primarily due to the burst of the housing bubble, subprime mortgage crisis, and subsequent economic recession, which left many homeowners underwater on their mortgages. The impact was felt across the United States and even had global repercussions, reshaping the financial landscape.
To understand the full extent of the crisis, it’s important to remember the role of credit default swaps and subprime mortgages. Many people mistakenly believed that housing prices would continue to rise indefinitely, while in reality, poor lending practices led to increased foreclosures. Learning from these errors can help prevent similar financial disasters in the future.

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\begin{tabular}{l|l}\multicolumn{1}{l}{ A variable that can't be accounted for is } & The author backs up the statement that the economy \\ can be unpredictable by pointing out that \\ a natural disaster such as a hurricane. As the & result of a hurricane, demand is guaranteed \\ to increase in a way that could not have been & (A) banking panics occur when confidence in the financial \\ system is strong. \\ predicted because the flow of goods into & (B) natural disasters can affect the demand for goods and \\ disrupt production. \\ impacted areas is blocked. If crops or power \\ facilities like oil refineries are damaged, then & C. customers are more willing to buy something when \\ interest rates are low. \\ demand is also affected. & (D) inflation occurs when prices for goods and services \\ decrease too quickly. \end{tabular}
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