One of the reasons that the FOMC lowered its target for the federal funds rate in September 2007 was
A)confidence that the fallout from rising mortgage default rates would not spread to the wider economy
B)the belief that lenders would respond to the housing crisis by loosening lending standards
C)more easily available credit boosting investment and economic growth
D)to add liquidity to financial markets and strengthen the economy
E)All of the answers are correct

Question

Quizplus · Accepted Answer

The FOMC lowered its target for the federal funds rate in September 2007 to add liquidity to financial markets and strengthen the economy. This action was taken in response to the growing concern over the impact of the housing crisis on the wider economy and the need to prevent a recession. Lowering the interest rates would encourage banks to lend more money, boosting consumption and investment, and driving economic growth.

One of the Reasons That the FOMC Lowered Its Target