How Did the Fed Contribute to the Recent Banking Crisis

question 89

Multiple Choice

How did the Fed contribute to the recent banking crisis?

• A)As the regulator of monetary policy,the Fed kept interest rates suppressed.
• B)As the regulator of monetary policy,the Fed ignored the warnings of Moody's and other bond rating agencies.
• C)The Fed required banks to create adjustable rate mortgages with interest rates significantly higher than those attached to fixed-rate mortgages.
• D)The Fed encouraged home ownership.

---

Definitions:

Depression

A mental health disorder characterized by persistently low mood, loss of interest in activities, and a variety of physical and emotional problems.

Prenatal Development

The process of growth and development within the womb from conception to birth.

Manic Episode

A period of abnormally elevated or irritable mood, arousal, and energy levels, often associated with bipolar disorder.

Roller Coaster

An amusement park ride consisting of a track with tight turns, steep slopes, and sometimes inversions, designed to thrill riders.