Many economists argue that the Fed contributed to the housing bubble by:
A. passing laws that allowed financial institutions to create credit default swaps.
B. buying mortgage-backed securities for foreclosed homes.
C. keeping the Fed funds rate lower than what the Taylor rule predicts.
D. paying interest on bank reserves.
Answer: C
You might also like to view...
In 2009, the Social Security System ran a surplus of approximately $137 billion
a. True b. False Indicate whether the statement is true or false
What is the impact of expansionary fiscal policy on the exchange rate? Explain the process through which expansionary fiscal policy affects the exchange rate
Economic growth is important because expansion in the output of goods and services
a. necessarily creates more jobs (more work for people). b. makes it possible for individuals to consume more and achieve higher living standards. c. leads to an increase in the general level of prices. d. generates additional tax revenues for the government.
If a firm in a competitive price-searcher market raises its price, it will
a. lose all of its sales. b. increase its sales. c. lose only some of its sales. d. have to go out of business.