Based on the information presented in the video, which of the following is likely to occur as a result of the Fed decreasing the money supply? Check all that apply.
What did you include in your response? Check any that apply.
unemployment✔ inflationstagflation
Free Banking Act✔ National Banking ActFederal Reserve Act
Depression of 1865Panic of 1893✔ Panic of 1907
Choose the best word or phrase from each drop-down menu. The Federal Reserve increases the money supply when it is trying to encourage the economy to . Consumers are more willing to spend using credit when the money supply is higher because interest rates are . One major positive effect of increasing the money supply is in the unemployment rate.
Choose the best word or phrase from each drop-down menu. Open market operations influence the directly. In order to lower the Federal Funds Rate, the Fed will securities, which the money supply in banks.
Based on the information presented in the video, what is the main goal of buying and selling government securities?
Now, write a paragraph explaining how the Fed responded to the financial crisis that began in 2008.Be sure to include how the Fed protected banks and why this was so important.
The Federal Reserve responded to the 2008 financial crisis by sharply lowering interest rates and providing emergency loans and other support to banks and financial institutions that were short of cash. It also bought financial assets to help keep credit flowing. Protecting banks was important because they process payments and provide loans to families and businesses. If many banks had failed, lending could have stopped, businesses might have struggled to operate, and the recession could have become much worse.
Did you find these answers helpful?