Recall the Application About How the Fed Kept the U

question 21

Multiple Choice

Recall the Application about how the Fed kept the U.S. financial system in operation following the attacks of September 11, 2001, to answer the following question(s) . To help prevent financial firms from defaulting on their debts, the Fed took several steps to provide additional funds to the financial system, including allowing banks to borrow more, increasing the difference between the credits and debits it extended while serving as a clearinghouse for checks, purchasing government securities, and providing dollars to foreign central banks. Together, these actions increased the credit extended by the Fed by over $90 billion.
-According to this Application, following the attacks of September 11, 2001, the Federal Reserve purchased government securities, putting $30 billion in the hands of private citizens and their banks. By extending cash to banks during the potential financial crisis following the September 11 attacks, the Fed was attempting to

• A) fend off a financial panic.
• B) decrease the federal deficit.
• C) reduce potential inflation.
• D) decrease net exports.

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Definitions:

Expanding

This refers to the process of increasing in size, volume, quantity, or scope.

Health-related

Pertains to aspects of health and wellbeing, including physical, mental, and social factors.

Possible Selves

Representations of what individuals could become, what they would like to become, and what they are afraid of becoming.

Depressed

A mental state characterized by feelings of sadness, loss of interest, and a lack of pleasure in life, often associated with a variety of mental health disorders.