In 2005 and 2006, Because of Fears of Inflation, the Fed

question 23

Multiple Choice

In 2005 and 2006, because of fears of inflation, the Fed:

• A)​increased interest rates which lead to higher monthly payments on fixed rate mortgages.
• B)​increased interest rates which lead to higher monthly payments on adjustable rate mortgages.
• C)​decreased interest rates which lead to higher monthly payments on fixed rate mortgages.
• D)​decreased interest rates which lead to higher monthly payments on adjustable rate mortgages.

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Definitions:

Payment on Account

A transaction that reduces the amount owed on an outstanding accounts payable balance.

Gross Profit

The financial metric that represents the difference between revenue and the cost of goods sold, before deducting overhead, payroll, taxation, and interest payments.

Operating Expenses

Costs that a business incurs through its normal business operations, including rent, salaries, and utility expenses.

Net Income

The end profit for a business after total revenue is reduced by expenses and tax obligations.