Describe, in economic terms what happened in the lead-up to the Financial Market Crisis in 2007 (both at a micro and macro level). As part of your answer discuss what some people feared would happen if no action was taken.

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2. Characterize the major steps taken by Federal Reserve Bank/ US Department of the Treasury to minimize the impact of the financial crisis.
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4. Define moral hazard. Explain how it applies to this situation.
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6. As part of your answer, briefly discuss whether or not you think the policies were “good” (make sure this is written as an evaluation in terms of economic efficiency and equity implications).
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Answer rating: 100% (QA)

Leadup to the Financial Market Crisis 2007 Micro Level At the micro level there was an increase in subprime lending where financial institutions provi... View the full answer