The accompanying figure shows new U.S. housing starts, in thousands of units per month, between January 1980 and January 2014. The graph shows a large drop in new housing starts in 1984–1991 and 2006–2009. New housing starts are related to the availability of mortgages.

a. What caused the drop in new housing starts in 1984–1991?

b. What caused the drop in new housing starts in 2006–2009?

c. How could better regulation of financial institutions have prevented these two instances?

Transcribed Image Text:

New housing starts (thousands) 2,500 2,000 1,500 1,000 500 1980 1985 Play Mong 1990 1995 2000 2005 2010 2014 Year