when the federal reserve lowered interest rates following the 2001 recession what did more people start to do?
A buy homes
b default on lans
c invest in dot-coms
d sell stock shares
When the Federal Reserve lowered interest rates following the 2001 recession, more people started to do option C: invest in dot-coms.
To understand why this happened, let's break it down:
1. The Federal Reserve and Interest Rates:
The Federal Reserve, often referred to as the "Fed," is the central bank of the United States. One of the tools the Fed uses to manage the economy is adjusting interest rates. Lowering interest rates is intended to stimulate economic activity by reducing the cost of borrowing money.
2. The 2001 Recession:
The 2001 recession was a period of economic decline in the United States, which started in March 2001 and lasted until November of that year. Many businesses struggled, and unemployment rates increased during this time.
3. Effect of Lowered Interest Rates:
When the Federal Reserve lowers interest rates, it becomes cheaper for individuals and businesses to borrow money. Lower rates encourage borrowing, which stimulates economic growth. This often leads people to take advantage of the lower costs to invest in various areas.
4. Dot-com Investments:
During the late 1990s and early 2000s, the dot-com bubble was a significant economic phenomenon. Many investors were rushing to invest in internet-based companies (commonly referred to as dot-coms) with hopes of making large profits. These companies were seen as having great potential for growth, and the lowered interest rates following the 2001 recession provided favorable conditions for investors to finance their investments.
Therefore, as a result of the combination of the lower interest rates and the ongoing dot-com investment trend, more people started investing in dot-coms after the Federal Reserve lowered interest rates following the 2001 recession.