In 2005 and 2006, because of fears of inflation, the Fed:
A)increased interest rates which lead to higher monthly payments on fixed rate mortgages.
B)increased interest rates which lead to higher monthly payments on ARMs.
C)decreased interest rates which lead to higher monthly payments on fixed rate mortgages.
D)decreased interest rates which lead to higher monthly payments on ARMs.

Question

Quizplus · Accepted Answer

The Fed increased interest rates to combat inflation, which led to higher monthly payments on Adjustable Rate Mortgages (ARMs) as these rates are variable and tied to the interest rate changes.

In 2005 and 2006, Because of Fears of Inflation, the Fed