When the Fed loaned to banks using banks' long-run assets such as mortgages as collateral, it was:
A)loosening its regulations of bank.
B)providing banks with liquidity.
C)giving banks assets.
D)conducting standard monetary policy.

Question

Quizplus · Accepted Answer

When the Federal Reserve loans to banks using long-term assets like mortgages as collateral, it is providing those banks with liquidity. This means it is offering them the necessary funds to meet their short-term obligations, ensuring the smooth functioning of the banking system.

When the Fed Loaned to Banks Using Banks' Long-Run Assets