In September 2007, reversing its course, the Federal Reserve began a series of:
A) interest rate increases, reversing its previous policy of lowering interest rates to fight the financial crisis.
B) interest rate increases to combat inflation.
C) cuts in the reserve requirements, reversing its previous policy of increasing the reserve requirement, to stop bank failures.
D) cuts in the federal funds target rate to lower the interest rate, reversing its previous policy of raising interest rates, to fight the financial crisis.

Question

Quizplus · Accepted Answer

In September 2007, the Federal Reserve reversed its previous policy of raising interest rates to fight the financial crisis and began cutting the federal funds target rate to lower interest rates. This was done in an effort to stimulate the economy and prevent a recession.

In September 2007, Reversing Its Course, the Federal Reserve Began