In August 2010, Massachusetts Enacted a 150-Day Right-To-Cure Period That

question 4

Multiple Choice

In August 2010, Massachusetts enacted a 150-day right-to-cure period that mandates that lenders give homeowners who fall behind on their mortgage an extra five months to become current before beginning foreclosure proceedings. Policymakers claimed that the policy would result in a higher proportion of delinquent borrowers becoming current on their mortgages. To test this claim, researchers took a sample of 244 homeowners in danger of foreclosure in the time period surrounding the enactment of this law. Of the 100 who fell behind just before the law was enacted, 30 were able to avoid foreclosure, and of 144 who fell behind just after the law was enacted, 48 were able to avoid foreclosure. Let p₁ and p₂ represent the proportion of delinquent borrowers who avoid foreclosure just before and just after the right-to-cure law is enacted, respectively. Assuming α = 0.10, does the evidence support the policymakers' claim?

• A) Yes, because the p-value is less than the critical value.
• B) No, because the test statistic value is less than the critical value.
• C) No, because the p-value is greater than the significance level.
• D) Yes, because the test statistic value is greater than the critical value.

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Definitions:

Ronald Reagan

The 40th President of the United States (1981-1989) known for his economic policies known as "Reaganomics," the end of the Cold War, and conservative political ideology.

Herbert Hoover

The 31st President of the United States (1929-1933), whose term was notably marked by the onset of the Great Depression.

Great Depression

A severe worldwide economic downturn that took place during the 1930s, characterized by high unemployment, deflation, and a significant fall in economic activity.

Economic Expansion

A phase of the business cycle where the economy grows and increases its output, leading to higher employment and income levels.