In September 2011,the Fed announced a new policy in which it would invest in additional mortgage-backed securities in an attempt to further reduce mortgage rates and boost the housing market.Lower mortgage rates should lead to an increase in refinancing,which should ________ disposable income and therefore ________ aggregate demand.

Question

Quizplus · Accepted Answer

Lower mortgage rates would lead to more people refinancing their mortgages, resulting in lower monthly payments and an increase in disposable income. This would lead to an increase in consumer spending, driving up aggregate demand. Therefore, option A is the correct answer.

In September 2011,the Fed Announced a New Policy in Which