When the Fed began to raise the federal funds rate in 2004:
A) investors quickly sold U.S. treasuries
B) default on subprime mortgages increased and housing prices fell
C) inflation picked up steam
D) housing prices recovered and grew, but more slowly than in the previous 10 years
E) stock markets retreated and fell to all-time lows

Question

Quizplus · Accepted Answer

When the Fed began to raise the federal funds rate in 2004, default on subprime mortgages increased and housing prices fell. This eventually led to the subprime mortgage crisis and the Global Financial Crisis in 2008.

When the Fed Began to Raise the Federal Funds Rate