Essay Questions (Final Exam)

  1. What is the difference between a housing loan given 30 years ago compared to one given 10 years ago?
    A housing loan given out 30 years ago was intended to stay on the banks books for the duration of the 30 years, a housing loan given out 10 years ago the banker did not care
  2. What is a CDO?
    Colateralized Debt Obligation (Combines different debts) these were large bundles of mortgages created by the large banks.
  3. What is CDS?
    Credit Default Swap (Insurance on CDO)
  4. Who were the rating agencies?
    • Rating Agencies:
    • -fitches
    • -moodies
    • -standard impores

    • Insurance Outfit:
    • -AIG
  5. What part did the rating agencies play?
    They were paid off by the banks to give the mortgages in the CDO's falsely high ratings so that they could continue creating them legally.
  6. Who is in charge of fiscal policy?
    Federal Reserve
  7. What are the four actions in fiscal policy to expand the economy?
    • 1 Lower the discount rate
    • 2 Lower the fed fund rate
    • 3 Buy bonds
  8. Who is in control of monetary policy?
    National Treasury
  9. What is expansionary monetary policy?
    • 1 increase spending
    • 2 Lower taxes
  10. What are the parts of the business cycle?
    Trough, peak, recession, and expansio
Card Set
Essay Questions (Final Exam)
Essay Questions (Final Exam)