Hovnanain Enterprises,a residential home builder based in New Jersey,did well during the mid-2000s but did not do so well in during and immediately after the recession of 2007-2009.The reason for this is
A)the Fed kept low interest rates in the mid-2000s but raised interest rates in 2007 to help fight inflation.
B)the Fed kept low interest rates in the mid-2000s but by 2007 the housing bubble had burst.
C)the Fed raised interest rates in the mid-2000s but lowered interest rates in 2007 to revive the housing market.
D)the Fed raised interest rates in the mid-2000s and raised interest rates in 2007 to help fight inflation.

Question

Quizplus · Accepted Answer

The bursting of the housing bubble in 2007 was a major factor in the decline of Hovnanian Enterprises. The Fed had kept interest rates low in the mid-2000s, contributing to a housing boom, but by 2007 the market had become oversaturated and the bubble burst. This led to a decline in the housing market and a subsequent decline in Hovnanian's business.

Hovnanain Enterprises,a Residential Home Builder Based in New Jersey,did Well