In September 2011,the Fed Announced a New Policy in Which

question 42

Multiple Choice

In September 2011,the Fed announced a new policy in which it would invest in additional mortgage-backed securities in an attempt to further reduce mortgage rates and boost the housing market.Lower mortgage rates should lead to an increase in refinancing,which should increase ________ and therefore increase ________.

• A) disposable income; aggregate demand
• B) household wealth; the value of homes
• C) the supply of new homes; aggregate supply
• D) property tax revenues; government spending

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Definitions:

Parent Company

A corporation that has control over one or more subsidiary companies, usually by owning a significant portion of their stock.

Fair Value

The predicted cost at which a property can be purchased or sold in a present deal between agreeable participants.

Equity Method

An accounting technique used to record investments in other companies, reflecting the owning company's proportionate share of the investee's profits.

Unrealized Gain Or Loss

Changes in the fair value of equity or debt securities for a period.