Answer: Media effect

**Correct answer: B — Media effect** Lagged or past interest rates are useful in modeling the **media effect**, which captures how homeowners respond to recent interest-rate movements and refinancing headlines. Past rates can proxy for borrower awareness of refinancing opportunities. As noted in the source, lagged rates help model: - the **change in rates over the past month**, and - the **level of rates relative to recent lows**. These are path-dependent effects, not path-independent values.

Author: Manit Arora