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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Definitions:

Pyridine

A basic nitrogen-containing heterocyclic aromatic compound, resembling benzene but with one CH group replaced by a nitrogen atom.

Pyrrole

An aromatic heterocyclic organic compound, consisting of a five-membered ring with one nitrogen atom. It is the foundation for many natural and synthetic compounds including pharmaceuticals.

Aromatic

Refers to a class of compounds that contain one or more planar ring structures with delocalized π-electron systems, leading to stable and often fragrant molecules.

Antiaromatic

A compound that is cyclic, conjugated, but does not follow Huckel's rule, often being less stable due to its electron configuration.