The ________ easing that the Fed created during the 2008 financial crisis was designed to stimulate ________.
A) credit; private banks to increase their lending
B) credit; the federal government to make loans directly to home buyers
C) credit; the federal government to make loans directly to small businesses
D) quantitative; private banks to increase their lending to home buyers
E) quantitative; decreased in the required reserve ratio

Question

Quizplus · Accepted Answer

The Fed created credit easing during the 2008 financial crisis to stimulate private banks to increase their lending. This was done by purchasing securities from banks, which injected new money into the financial system and therefore provided banks with additional funds to lend out. Quantitative easing refers to the Fed's purchase of longer-term securities to lower long-term interest rates, which is a separate policy from credit easing. Choices B, C, and E are incorrect because the Fed did not make direct loans to home buyers or small businesses during the crisis, nor did it decrease the required reserve ratio through quantitative easing.

The ________ Easing That the Fed Created During the 2008