Question

In: Economics

In an effort to stabilize the banking sector and keep banks lending, from October 2008 to...

In an effort to stabilize the banking sector and keep banks lending, from October 2008 to September 2009, the Fed _____.

  • raised reserve requirements

  • lowered the federal funds target rate

  • declared a series of bank holidays to give banks a chance to recover from excessive withdrawals from customer accounts

  • raised the amount of interest paid on reserves held at Fed banks

Solutions

Expert Solution

The answer is option b- lowered the federal funds target rate.

In an effort to stabilize the banking sector and keep banks lending, from October 2008 to September 2009, the Fed: lowered the federal funds target rate.


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