7
AssignmentMultiple Select

Economic Policy: Influential Theories

Question 7 • * HSA 26-27 Economics

Identify the actions taken by the Fed to assist banks during the financial crisis of 2008. Check all that apply.

Answer
A
The Fed implemented new fiscal policy measures to encourage consumer spending.
B
The Fed placed a cap on the cash that individuals could receive from banks at one time.
C
The Fed bought securities to increase the money supply.
D
The Fed lowered interest rates, hoping to increase available credit.
E
The Fed carried out open market operations to stimulate growth.

Explanation

The Fed used monetary policy to support banks and the economy during the crisis. It bought securities to add money to the financial system, lowered interest rates to make borrowing more affordable, and used open market operations to stimulate growth. Fiscal policy is handled by the government, not the Fed, and the Fed did not cap how much cash individuals could withdraw.

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