In the fall of 2008, the Federal Reserve reduced its target for the federal funds rate dramatically. The Fed likely made this decision because it believed:
A)savers are not being given enough encouragement to save.
B)unemployment was too low and needed to be boosted.
C)inflation might become a problem and was moving to head it off.
D)there was threat of a recession and was trying to stimulate the economy.

Question

Quizplus · Accepted Answer

In the fall of 2008, the Federal Reserve reduced its target for the federal funds rate as a response to the financial crisis and the looming threat of a recession. Lowering the federal funds rate is a monetary policy tool used to stimulate economic activity by making borrowing cheaper, encouraging spending and investment.

In the Fall of 2008, the Federal Reserve Reduced Its