Some Analysts Blame the Last Economic Crisis on Fed Policy

question 161

Multiple Choice

Some analysts blame the last economic crisis on Fed policy.They argue that:

• A) a restrictive policy lowered aggregate demand and GDP.
• B) low interest rates encouraged excessive mortgage borrowing,leading to the housing bubble.
• C) the Fed securitized the mortgages into collateralized debt obligations and encouraged excessive risk taking.
• D) the Fed did not adequately regulate the mortgage market's credit standards for issuing loans as required by the Federal Reserve Act.

---

Definitions:

Instincts

Innate, typically fixed patterns of behavior in animals and humans in response to certain stimuli.

Problems With Formal Organizations

Issues or challenges that arise within structured groups or entities, often related to bureaucracy, inefficiency, or conflict among members.

Dissatisfaction

Dissatisfaction is the feeling of displeasure or unhappiness resulting from unmet expectations or desires.

Psychological

Relates to the mental processes and emotional state of an individual or group.