After the 2008 fiNancial Crisis, Why Did the Federal Reserve

question 281

Multiple Choice

After the 2008 financial crisis, why did the Federal Reserve effectively lose its ability to increase the money supply by manipulating the federal funds rate target?

• A) Regulatory changes in response to the financial crisis significantly restricted the use of the federal funds rate target.
• B) The increase in excess reserves in the banking system virtually eliminated the need for banks to borrow in the federal funds market.
• C) Borrowing of excess reserves moved from traditional banks to the shadow banking industry.
• D) The federal funds rate rose significantly and would not respond to Fed changes in the supply of reserves.

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Definitions:

Talk Therapy

A form of psychotherapy that involves discussing one's feelings, thoughts, and behaviors with a therapist to gain insight, resolve problems, or improve mental health.

Listening Therapy

A therapeutic approach that uses the act of listening to sound, music, or spoken word to improve physical or psychological conditions, often related to auditory processing issues or emotional wellbeing.

Intrapersonal Communication

The process of internal dialog or communication within an individual, involving thoughts, feelings, and self-reflection.

Open Communication

The practice of freely sharing thoughts, feelings, and information with others in a straightforward and honest manner.