Recall the Application about how the Fed kept the U.S. financial system in operation following the attacks of September 11, 2001, to answer the following question(s) . To help prevent financial firms from defaulting on their debts, the Fed took several steps to provide additional funds to the financial system, including allowing banks to borrow more, increasing the difference between the credits and debits it extended while serving as a clearinghouse for checks, purchasing government securities, and providing dollars to foreign central banks. Together, these actions increased the credit extended by the Fed by over $90 billion.
-According to this Application, immediately following the attacks of September 11, 2001, the Fed provided additional funds to the financial system. On September 12, banks borrowed $45.5 billion dollars, up from $99 million the previous week. This was an example of the Fed acting as a
A) medium of exchange.
B) unit of account.
C) store of value.
D) lender of last resort.
Correct Answer:
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