Before the fiNancial Crisis of 2008, If the Fed Wanted

question 12

Multiple Choice

Before the financial crisis of 2008, if the Fed wanted to lower the Federal funds rate, it

• A) increased the discount rate.
• B) increased the reserve ratio.
• C) bought bonds from banks and the public.
• D) sold bonds to banks and the public.

---

Definitions:

Budget Constraint

The limitation on the consumption choices of an individual or family based on their income and the prices of goods and services.

Indifference Curve

A graph representing combinations of goods or services among which an individual is equally satisfied.

Equally Affordable

A condition where different goods or services have the same cost in terms of their value to a consumer, making them equally desirable.

Indifference Curves

Graphical representations in economics showing different combinations of two goods among which a consumer is indifferent in terms of utility or satisfaction.