The Fed's low short-term interest rate policy from 2002-2004, along with housing regulations promoting low down-payment loans to sub-prime borrowers, encouraged
A) conventional 30-year, fixed rate mortgages which have relatively high default and foreclosure rates.
B) conventional 30-year, fixed rate mortgages which have relatively low default and foreclosure rates.
C) adjustable rate mortgages which have relatively low default and foreclosure rates.
D) adjustable rate mortgages which have relatively high default and foreclosure rates.

Question

Quizplus · Accepted Answer

The low interest rates and housing policies encouraged sub-prime borrowers to take adjustable rate mortgages, which had higher default and foreclosure rates when rates adjusted upwards.

The Fed's Low Short-Term Interest Rate Policy from 2002-2004, Along