What Unusual Measures Did the Fed Take in Trying to Reduce

question 63

Multiple Choice

What unusual measures did the Fed take in trying to reduce long-term interest rates during the financial crisis of 2007-2009?

• A) buying mortgage-backed securities issued by Fannie Mae and Freddie Mac
• B) reducing the federal funds rate multiple times
• C) issuing its own securities
• D) eliminating the discount rate on loans to member banks

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Definitions:

Lawn Mower

A machine equipped with revolving blades to cut grass to an even length, typically used in garden and lawn maintenance.

Bubbles

Economic phenomena characterized by rapid increases in asset prices to levels significantly above their fundamental values, followed by abrupt crashes.

Demand

The desire combined with the ability to purchase a specific quantity of a good or service at a particular price and time.

Supply

The total amount of a product or service available for purchase at any given price point in a market.