Which of the following contributed to the dramatic rise in housing prices between 2002 and mid-year 2006?
A) Government policy made credit for housing abundant and easily available.
B) The Fed's restrictive monetary policy, which led to high interest rates.
C) The tightening of loan standards by commercial lenders.
D) The large amounts of reserves and equity capital being held by financial institutions in order to back new mortgages.

Question

Quizplus · Accepted Answer

Government policy, particularly through Fannie Mae and Freddie Mac, made credit for housing abundant and easily available during this time period, leading to increased demand and subsequently driving up housing prices.

Which of the Following Contributed to the Dramatic Rise in Housing