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

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