Chapter 26, Problem 5MCQ

To determine

The correct contributor in the financial crisis of 2008 from the given options.

Explanation of Solution

The financial crisis began in 2008 as a result of a number of intricate components coming together.

After a protracted period of price increase that reached an irrational size, the crisis was primarily caused by a sharp decrease in American real estate prices. As interest rates rose and income levels declined, an increasing number of borrowers found themselves unable to pay their credit commitments. The crisis has expanded to the global financial crisis as a result of the reselling of loans to banks all over the world (securitization).

Thus, from the above, we can conclude that the correct option is E.