How did the Troubled Asset Relief Program (TARP) help the banks in the U.S. during the financial crisis of 2007-2009?
What will be an ideal response?
At the peak of the 2007-2009 financial crisis, the U.S. Congress passed emergency legislation authorizing the Treasury Department to spend $700 billion to stabilize the financial system. Of the $700 billion in TARP funds, $115 billion was used to increase the capital of the eight largest U.S. banks, which were all forced to participate. In essence, the banks were required to issue new shares that the government bought. Some of the banks didn't like this plan, since the government became a partial owner. In addition, all eight banks were obligated to limit the compensation of their senior executives. An additional $135 billion was used to increase the capital of smaller banks that applied for TARP support. These bank capital infusions – totaling $250 billion – gave the participating banks breathing room, and the financial system as a whole stabilized.
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Every society faces economic trade-offs. This means
A) not everyone can have enough goods to survive. B) some people live better than others do. C) society's output cannot be made available to all. D) producing more of one good means less of another good can be produced.
Using the Taylor rule, if the current inflation rate equals the target inflation rate and real GDP is less than potential GDP, then the federal funds target rate ________ the sum of the current inflation rate plus the real equilibrium federal funds
rate. A) will be less than B) will be greater than C) will be the same as D) may be greater than or less than