What Was the Impact of the Community Reinvestment Act on Fannie

question 9

Multiple Choice

What was the impact of the Community Reinvestment Act on Fannie Mae?

• A) It had to stop purchasing mortgage loans
• B) It could only purchase loans that were not high credit risks
• C) It enabled Fannie Mae to expand its portfolio substantially
• D) None of the above

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Definitions:

Minimum Efficient Scale

The smallest amount of production a company can achieve while still taking full advantage of economies of scale with regards to minimizing its costs.

Long-Run ATC

The average total cost of production when all inputs, including capital, are variable and the scale of production can change.

Diseconomies of Scale

The phenomenon where operational costs per unit increase as the output increases, often due to inefficiencies or management challenges.

Natural Monopoly

A market structure where a single supplier is most efficient in producing or providing goods or services due to high fixed or startup costs, making competition less viable.