What was the main catalyst for the 2007 Global Financial Crisis?Group of answer choicesThe introduction of new financial regulationsAutomatic trading destabilising the stockmarketThe cost of extreme weather eventsEconomic tensions between the US and ChinaA downturn in the US housing market

The main catalyst for the 2007 Global Financial Crisis was a downturn in the US housing market. Here are the steps that led to the crisis:

1. During the early 2000s, there was a boom in the US housing market. This was fueled by low interest rates, risky loans, and toxic financial products.

2. Many of these loans were given to subprime borrowers, or those who were at a higher risk of defaulting on their loans. These loans were then packaged into mortgage-backed securities (MBS) and collateralized debt obligations (CDOs), which were sold to investors.

3. These financial products were rated highly by credit rating agencies, leading many investors to believe they were safe investments.

4. However, when the housing market began to decline in 2006, many homeowners began to default on their loans. This led to a significant drop in the value of MBS and CDOs.

5. As a result, many financial institutions that held these securities suffered severe losses. This led to a crisis in the banking sector, which quickly spread to the rest of the economy.

6. The crisis led to a global recession, with many countries experiencing a significant decline in GDP, high unemployment rates, and a general slowdown in economic activity.