When the Fed Began to Raise the Federal Funds Rate

Multiple Choice

When the Fed began to raise the federal funds rate in 2004:

A) investors quickly sold U.S. treasuries
B) default on subprime mortgages increased and housing prices fell
C) inflation picked up steam
D) housing prices recovered and grew, but more slowly than in the previous 10 years
E) stock markets retreated and fell to all-time lows