A criticism of the Fed's actions during the credit crisis is that it:
A)did not attempt to increase the liquidity of the debt markets.
B)focused too much on financial institutions.
C)allowed Bear Stearns to fail and file for bankruptcy.
D)periodically raised the primary credit rate.

Question

Quizplus · Accepted Answer

The Fed's actions during the credit crisis were heavily focused on aiding financial institutions, such as providing significant loans and bailouts to major banks. However, criticism suggests that this focus detracted from addressing the wider economic issues in the debt markets, including increasing their liquidity. The Fed also allowed other financial institutions, such as Lehman Brothers, to fail, which further contributed to the crisis. Periodically raising the primary credit rate was one of the Fed's tools to manage inflation and overall economic stability, but it was not a significant factor in the credit crisis.

A Criticism of the Fed's Actions During the Credit Crisis