Which of the Following Resulted from Fed Policy That First

question 83

Multiple Choice

Which of the following resulted from Fed policy that first kept short-term interest rates extremely low during 2002-2004, and then pushed them up substantially during 2005-2006?

• A) a reduction in housing prices because variable rate mortgages were unattractive throughout this period
• B) upward pressure on housing prices when the interest rates were low, but downward pressure on the price of housing as the interest rates rose
• C) lower default rates on adjustable rate mortgages as the interest rates peaked during 2006
• D) downward pressure on housing prices when the interest rates were low, but upward pressure on the price of housing as the interest rates rose

---

Definitions:

Ideal Gas Law

A fundamental equation that relates pressure, volume, temperature, and the amount of gas, represented as PV = nRT.

Hydrogen Gas

A colorless, odorless, highly flammable gas, the lightest of all gases, used in various industrial processes.

Temperature

An indicator of how hot or cold a system is, determined by the mean kinetic energy of its particles.

Ideal Gas Law

The principle that the state of an ideal gas is determined by its pressure, volume, and temperature, described by the equation PV=nRT.