Which of the following policies that the Fed followed between 2002 and 2005 has been proposed as one of the reasons for the subsequent housing bust and corresponding financial crisis?
A)The Fed had interest rates that were too high during this period.
B)The Fed had interest rates that were too volatile during this period.
C)The Fed had interest rates that were too low during this period.
D)The Fed had legal reserve requirements that were too high during this period.
E)None of these.

Question

Quizplus · Accepted Answer

The Fed had kept interest rates artificially low between 2002 and 2005, which encouraged borrowing and lending in the housing market. This led to a housing bubble that eventually burst, causing the financial crisis of 2008.

Which of the Following Policies That the Fed Followed Between