GATE ECE 2020 | GA Question: 6

Question

The global financial crisis in $2008$ is considered to be the most serious world-wide financial crisis, which started with the sub-prime lending crisis in $\text{USA}$ in $2007$. The sub-prime lending crisis led to the banking crisis in $2008$ with the collapse of Lehman Brothers in $2008$. The sub-prime lending refers to the provision of loans to those borrowers who may have difficulties in repaying loans, and it arises because of excess liquidity following the East Asian crisis.

Which one of the following sequences shows the correct precedence as per the given passage?

• A. East Asain crisis$\rightarrow$ subprime lending crisis$\rightarrow$banking crisis$\rightarrow$global financial crisis.
• B. Subprime lending crisis$\rightarrow$ global financial crisis$\rightarrow$ banking crisis$\rightarrow$ East Asian crisis.
• C. Banking crisis$\rightarrow$ subprime lending crisis$\rightarrow$ global financial crisis$\rightarrow$ East Asian criris.
• D. Global financial crisis$\rightarrow$ East Asian crisis$\rightarrow$ banking crisis$\rightarrow$ subprime lending crisis.

Answer 1

The global financial crisis in $2008$ is considered to be the most serious world-wide financial crisis, which started with the sub-prime lending crisis in USA in $2007.$

• $\implies$ subprime lending crisis→ global financial crisis

The sub-prime lending crisis led to the banking crisis in $2008$ with the collapse of Lehman Brothers in $2008.$

• $\implies$ subprime lending crisis→ banking crisis

The sub-prime lending refers to the provision of loans to those borrowers who may have difficulties in repaying loans, and it arises because of excess liquidity following the East Asian crisis.

• $\implies$ east Asian crisis→ subprime lending crisis

So, the correct answer is Option A.

Comments

@Arjun sir option D also can be correct bcoz here not mentioned that precedance is in increasing or decresing order.

Answer 2

Option A. East Asian crisis→ subprime lending crisis→banking crisis→global financial crisis.

Answer 3

 D also can be correct bcoz here not mentioned that precedance is in increasing or decresing order..