During the Turmoil in the Market for Subprime Mortgages in 2007

question 194

Multiple Choice

During the turmoil in the market for subprime mortgages in 2007 and 2008,the Fed increased the volume of discount loans.The goal of the Fed was to

• A)reduce the rate of inflation.
• B)stimulate economic growth.
• C)reduce unemployment.
• D)reassure financial markets and promote financial stability.
• E)reduce the current account deficit.

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Definitions:

Mere Exposure Effect

A psychological phenomenon whereby people tend to develop a preference for things simply because they are familiar with them.

Familiarity Breeds

A phrase suggesting that extensive knowledge of or exposure to something may lead to a loss of appreciation or interest.

Opposites Attract

A popular concept suggesting that individuals with differing personalities, interests, or physical attributes are often attracted to each other.

Average Price

The mean cost of a group of goods or services, calculated by dividing the total cost by the number of units.