After the housing market collapse in the late 2000s, the U. S. economy suffered a downturn. In what ways could the Federal Reserve reduce the size of this downturn?

A. It could raise the interest rates to double what they were.

B. It could decrease the interest rates on bank loans.

C. It could buy and rebuild houses to create jobs.

D. It could sell mortgages to improve housing market growth.

Question

Social Studies

Guillermo

25 January, 21:03

After the housing market collapse in the late 2000s, the U. S. economy suffered a downturn. In what ways could the Federal Reserve reduce the size of this downturn?

A. It could raise the interest rates to double what they were.

B. It could decrease the interest rates on bank loans.

C. It could buy and rebuild houses to create jobs.

D. It could sell mortgages to improve housing market growth.

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Answers (1)

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Burch · Answer 1

My educated guess would be (B) because that's what the Fed did. It reduced interest rates on loans that banks make to each other to near zero as part of its efforts to stimulate the economy and keep it liquid.