Two Actions by the Fed During Alan Greenspan's Term as Chairman

question 114

Multiple Choice

Two actions by the Fed during Alan Greenspan's term as chairman have been identified as possibly contributing to the financial crisis in 2008.Which of the following was one of those actions?

• A)decreasing the money supply to fight the possibility of disinflation
• B)the decision to keep the federal funds rate at 1 percent from June 2003 to June 2004
• C)working in concert with the European Central Bank to stabilize the dollar / euro exchange rate
• D)financing the first Gulf War by printing money and generating rapid inflation

---

Definitions:

Types of Saving

Various forms in which individuals or entities can save their money, such as bank deposits, investments, or pension funds.

Corporate Bonds

Debt securities issued by corporations to fund their operations, expansions, or projects, carrying a promise to return the principal along with agreed-upon interest payments.

Bondholders

Individuals or entities that hold debt securities issued by corporations or governments, entitled to receive interest payments and the return of principal.

Stockholders

Individuals or entities that own shares in a corporation, giving them partial ownership of the company.