Recall the Application about the Fed's response to the collapse of the investment house Bear Stearns as well as its handling of the 2008 financial crisis with respect to other financial institutions to answer the following question(s).
-According to this Application, the Fed responded to the financial crisis by continuing to develop new programs. One example of this was its announcement that it would now purchase commercial paper, which is the short-term debt of corporations. This is an example of the Fed acting as a
A) medium of exchange.
B) lender of last resort.
C) store of value.
D) unit of account.

Question

Quizplus · Accepted Answer

The Fed's announcement that it would purchase commercial paper is an example of the Fed acting as a lender of last resort, as it was providing short-term funding to corporations that were struggling to access credit during the financial crisis.

Recall the Application About the Fed's Response to the Collapse