During the Financial Crisis of 2007-2009, Why Did the Federal

question 69

Multiple Choice

During the financial crisis of 2007-2009, why did the Federal Reserve begin to utilize various types of unconventional monetary policy?

• A)The federal funds rate had already been increased as much as possible.
• B)The discount rate had already been increased as much as possible.
• C)The federal funds rate had already been reduced to zero.
• D)The discount rate had already been reduced to zero.

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Definitions:

Net Present Value

A calculation that discounts future cash flows back to their present value to evaluate and compare the profitability of investments or projects.

Project Analysis

The process of evaluating the viability and profitability of a project or potential investment, often involving calculations of various financial metrics and consideration of risk factors.

Discount Rates

Interest rates used to determine the present value of future cash flows, important in finance for valuation and risk assessment purposes.