Exhibit 20-6 Money, investment and product markets 
In Exhibit 20-6, if the Fed believes the economy is at AD3, how might it engineer a decline in the price level?
Definitions:
Secondary Mortgage Market
A market in which mortgages originated by a lender are sold to another financial institution. In recent years, the major buyers in this market have been Fannie Mae, Freddie Mac, and large investment banks.
Lending Standards
The criteria and guidelines used by financial institutions to determine the creditworthiness of prospective borrowers and to make decisions about loan applications.
Housing Prices
The amount of money required to buy homes in a particular area, which can fluctuate based on demand, location, and economic conditions.
Housing Bust
A rapid and significant decline in the housing market, characterized by falling home prices and increased foreclosures.
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