What Unusual Measures Did the Fed Take in Trying to Reduce

question 56

Multiple Choice

What unusual measures did the Fed take in trying to reduce the risk premium 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:

Herfindahl Index

A measure of market concentration, calculated by summing the squares of the market shares of all competitors within an industry.

Clayton Act

A U.S. legislation enacted in 1914 aimed at promoting competition among businesses by prohibiting certain types of anti-competitive practices.

U.S. Justice Department

A federal executive department responsible for the enforcement of the law and administration of justice in the United States.

Structuralist View

A perspective in various academic disciplines that emphasizes the importance of underlying structures in understanding social phenomena, economics, or literary interpretations.