22. When the federal reserve lowered interest rates falling that 2001 recession, what did more people start to do?
A. Buy homes
B. Default on loans
C. Invest in dot-coms
D. Sell stock shares
No, most people were not interested in investing in dot.com businesses. They wanted to own a home. When interest rates are low, that's the time to buy a house.
Interest rates are the money charged by banks for loans, mortgages, and charge cards.
Ohhhhhh I understand now thank you so much!!!!
If you don't know the answer, you don't understand what lowered interest rates are.
You are very welcome.
To determine the correct answer, let's break down the question and analyze the effects of lowering interest rates during the 2001 recession.
The 2001 recession refers to a period of economic slowdown that occurred between March 2001 and November 2001 in the United States. During this time, the Federal Reserve, which is responsible for managing the country's monetary policy, made efforts to stimulate the economy.
Lowering interest rates is one of the measures that the Federal Reserve can implement to encourage borrowing and spending, which, in turn, can stimulate economic growth. So, when the Federal Reserve lowered interest rates during the 2001 recession, it was done to prompt specific changes in people's financial behavior.
To determine what more people started to do as a result, let's analyze each option:
A. Buy homes: Lower interest rates make borrowing money cheaper, including mortgage loans. This affordability often triggers an increase in home purchases since lower interest rates mean lower monthly mortgage payments. Buying homes becomes more attractive, encouraging people to enter the housing market.
B. Default on loans: Lower interest rates generally do not lead to an increase in loan defaults. In fact, reducing interest rates can make it easier for borrowers to meet their loan obligations by lowering the cost of borrowing. Hence, this option is less likely to be the correct answer.
C. Invest in dot-coms: The dot-com bubble burst in 2000, causing the stock market to plummet and numerous dot-com companies to fail. By 2001, the focus in the market had shifted away from dot-coms, so it is unlikely that people started investing heavily in this sector after the Federal Reserve lowered interest rates. Thus, this option is also less likely to be the correct answer.
D. Sell stock shares: Lowering interest rates typically encourages investors to shift away from low-yield bonds and seek higher-yield investments. This behavior is often reflected in an increased demand for stocks and other assets. Therefore, it is unlikely that more people started selling stock shares after the interest rate cut.
Based on this analysis, the correct answer would be A. Buy homes. Lower interest rates during the 2001 recession made buying homes more affordable, leading to an increase in home purchases.