In response to the financial crisis in 2008, the Fed created which of the following policy tools?
A) Quantitative easing.
B) The required reserve ratio.
C) The discount rate.
D) The federal funds rate.
E) Open market operations.

Question

Quizplus · Accepted Answer

In response to the financial crisis in 2008, the Fed created the policy tool of Quantitative easing, which involved buying large amounts of government securities and other securities in the open market to increase the money supply and lower interest rates. The other policy tools listed (required reserve ratio, discount rate, federal funds rate, and open market operations) were already in use by the Fed prior to the crisis.

In Response to the Financial Crisis in 2008, the Fed