The initial response of the Federal Reserve to the economic collapse at the beginning of the Great Depression was to
A)observe from the sidelines
B)lend vigorously to banks facing liquidity problems
C)guarantee customer deposits in failed banks
D)abolish previously imposed credit controls
E)conduct huge open market sales in an effort to change interest rates

Question

Quizplus · Accepted Answer

The Federal Reserve initially responded to the economic collapse at the beginning of the Great Depression by observing from the sidelines, rather than taking aggressive action to support banks or the economy. This approach is widely criticized for exacerbating the severity of the Depression.

The Initial Response of the Federal Reserve to the Economic