Answer: b) Threshold effect

**Correct answer: Threshold effect** If mortgage rates are at 4% but **4% is no longer a new recent low**, the **media effect** is weaker because borrowers are not being prompted by a fresh rate breakthrough. In that case, refinancing behavior is more likely driven by borrowers' **individual refinancing thresholds**. - **Threshold effect**: refinancing occurs when rates fall below a borrower-specific cutoff. - **Media effect**: tied to a new low or a noticeable change in rates. - **Burnout effect**: concerns reduced refinancing among borrowers who have already refinanced. Because the rate level is not a fresh trigger, the **threshold effect** is the best choice.

Author: Manit Arora