The extra lending by the Fed during the 2007-2009 recession was done primarily to:
A) lower interest rates.
B) restore confidence in the banking system.
C) restore liquidity to credit markets.
D) increase the money supply.

Question

Quizplus · Accepted Answer

The extra lending by the Fed during the 2007-2009 recession was primarily done to restore liquidity to credit markets. With the financial crisis, credit markets dried up and financial institutions found it difficult to borrow from one another. The Fed's lending helped to inject money into the credit markets and restore their functioning.

The Extra Lending by the Fed During the 2007-2009 Recession