What did the Federal Reserve do during the financial crisis of 2008 and 2009?
What will be an ideal response?
The Federal Reserve serves as the lender of last resort. During the financial crisis it established many innovative facilities that were designed to keep money and credit available and flowing to financial institutions and businesses. It did so by loaning more funds and purchasing hard-to-sell securities from banks and other institutions. It also paid banks interest on the deposits they were required to keep at the Federal Reserve or that they held in their bank vaults.
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What is the difference between a market equilibrium and a competitive market equilibrium?
What will be an ideal response?
The Federal Open Market Committee (FOMC) of the Federal Reserve System is primarily for:
A. Maintaining cash reserves that can be used to settle international transactions B. Supervising banks to make sure that markets are open to all and remain competitive C. Issuing currency and acting as the fiscal agent for the Federal government D. Setting the Fed's monetary policy and directing the purchase and sale of government securities