Some analysts blame the last economic crisis on Fed policy.They argue that:
A) a restrictive policy lowered aggregate demand and GDP.
B) low interest rates encouraged excessive mortgage borrowing,leading to the housing bubble.
C) the Fed securitized the mortgages into collateralized debt obligations and encouraged excessive risk taking.
D) the Fed did not adequately regulate the mortgage market's credit standards for issuing loans as required by the Federal Reserve Act.

Question

Quizplus · Accepted Answer

Low interest rates encouraged excessive mortgage borrowing, which inflated the housing market and eventually led to the collapse of the housing bubble. This was a key factor in the last economic crisis.

Some Analysts Blame the Last Economic Crisis on Fed Policy