One of the extraordinary policy actions taken by the Fed in response to the financial crisis of 2007-2009 was making huge asset purchases.These asset purchases greatly increased all of the following EXCEPT
A) bank reserves.
B) the size of the Feds balance sheet.
C) the federal funds rate.
D) the monetary base.

Question

Quizplus · Accepted Answer

The asset purchases made by the Fed aimed at increasing bank reserves, the size of the Fed's balance sheet, and the monetary base. However, it did not directly impact the federal funds rate, which is the interest rate at which banks lend and borrow excess reserves from one another. The Fed uses other policy tools, such as adjusting the target federal funds rate, to influence short-term interest rates.

One of the Extraordinary Policy Actions Taken by the Fed