Question

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

Answer 1

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.