By purchasing mortgage-backed securities in 2008, the Fed helped stabilize financial markets more generally.

Question

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The purchase of mortgage-backed securities by the Fed in 2008 helped stabilize financial markets as it provided liquidity to financial institutions that were struggling due to the subprime mortgage crisis. This, in turn, prevented a complete collapse of the financial system, as feared at the time.

By Purchasing Mortgage-Backed Securities in 2008, the Fed Helped Stabilize