Did the Federal Reserve pursue an expansionary or a contractionary monetary policy?

Give at least two examples of actions that support your answer.

Answer: The Federal Reserve took an expansionary approach during the crisis. This was done by expanding the money supply and boosting liquidity. This can be seen in the Fed's actions of lending to banks, purchasing securities, and lowering the federal funds rate in order to lower overall interest rates. The Fed's goal was to increase consumer spending and overall liquidity within the system, and they pursued this by expanding the supply of liquid money.

Question

Social Studies

Stanley Mcmillan

15 January, 22:03

Did the Federal Reserve pursue an expansionary or a contractionary monetary policy?

Give at least two examples of actions that support your answer.

Answer: The Federal Reserve took an expansionary approach during the crisis. This was done by expanding the money supply and boosting liquidity. This can be seen in the Fed's actions of lending to banks, purchasing securities, and lowering the federal funds rate in order to lower overall interest rates. The Fed's goal was to increase consumer spending and overall liquidity within the system, and they pursued this by expanding the supply of liquid money.

+3

Answers (1)

Know the Answer?

Roberts · Answer 1

The Federal Reserve wanted to increase consumer spending so they forced an expansionary monetary policy by making lending more affordable and more attractive to consumers. By forcing more money into the hands of users it stimulates the economy by encouraging growth by spending.