Question

This large influx of money to U.S. banks and financial institutions, along with low interest rates, made it easier for Americans to get credit. These developments allowed more families to borrow money for cars, and homes, and college tuition, some for the first time. They allowed more entrepreneurs to get loans to start new businesses and create jobs.

Unfortunately, there were also some serious negative consequences, particularly in the housing market. Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.
Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay. Many borrowers took out loans larger than they could afford, assuming that they could sell or refinance their homes at a higher price later on.
Optimism about housing values also led to a boom in home construction. Eventually, the number of new houses exceeded the number of people willing to buy them. And with supply exceeding demand, housing prices fell, and this created a problem.
Borrowers with adjustable-rate mortgages, who had been planning to sell or refinance their homes at a higher price, were stuck with homes worth less than expected, along with mortgage payments they could not afford.
As a result, many mortgage-holders began to default. These widespread defaults had effects far beyond the housing market.
12
Which statement best synthesizes information from both passages?
A.
Unemployed Americans are increasingly dependent on easy credit.
B.
Politicians assess the housing market to evaluate America's economic stability.
C.
The cost of government regulation is worth the consumer protection it provides.
D.
The economy benefits from reduced prices when supply exceeds demand.

Answer 1

Step-by-step explanation:

The passage describes how an influx of money to banks and financial institutions made it easier for Americans to obtain credit, leading to more borrowing for homes, cars, and education. However, this also led to negative consequences in the housing market, including the approval of loans for borrowers who could not afford them and an excess of new homes leading to falling housing prices. As a result, many mortgage-holders defaulted, which had effects beyond the housing market.

Therefore, the best statement that synthesizes information from both passages is: The easy credit and faulty assumptions that led to excesses and bad decisions in the housing market had negative consequences, including widespread defaults that had effects far beyond the housing market.