Questions: Which of the following accurately describes the relationship between mortgage default rates and the 2008 recession? a) The recession of 2008 triggered the initial increase in the mortgage default rate. b) The rise in the mortgage default rate preceded the recession and it was a major cause of the 2008 economic downturn. c) Both the increase in the mortgage default rate and the economic recession were the result of the stock market crash of 2008. d) The rise in the mortgage default rate and the economic recession were separate issues and there was no relationship between the two.

The answer is b) The rise in the mortgage default rate preceded the recession and it was a major cause of the 2008 economic downturn.

This option is incorrect because the increase in mortgage default rates began before the recession officially started. The housing market crisis, characterized by a significant rise in mortgage defaults, was one of the primary factors that led to the recession.

This option is correct. The increase in mortgage default rates, particularly in subprime mortgages, began in the mid-2000s and significantly contributed to the financial instability that led to the 2008 recession. The collapse of the housing bubble and the subsequent rise in defaults caused severe financial strain on banks and financial institutions, leading to a broader economic downturn.

This option is incorrect because the stock market crash of 2008 was a consequence, not a cause, of the rising mortgage default rates and the ensuing financial crisis. The financial instability caused by the mortgage defaults and the collapse of major financial institutions led to the stock market crash.

This option is incorrect because there is a well-documented relationship between the rise in mortgage default rates and the 2008 recession. The mortgage crisis was a significant factor that triggered the broader economic downturn.