Regulatory Policies Requiring Lenders to Extend More Low Down-Payment Loans

question 79

Multiple Choice

Regulatory policies requiring lenders to extend more low down-payment loans to higher-risk borrowers along with the Fed's low short-term interest rate policy during 2002-2004 caused

• A) housing prices to fall during that period.
• B) a reduction in the use of adjustable rate mortgages to finance the purchase of housing.
• C) a reduction in housing construction during 2002-2005.
• D) mal-investment, that is, excessive investment in housing construction during 2002-2005.

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