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Question
What two policies were used by the Fed in the Great Recession? Explain what the Fed does in implementing these two policies.
Solution
VerifiedMonetary policy has been the main factor in reducing the negative impact of the Great Recession, reducing interest rates to the lowest possible level. After that FED didn't change those rates for five years.The second was quantitative easing, the policy which also kept interest rates very low, using other ways to accomplish this. One way was pumping money into the economy by buying risk securities, knowing that will keep rates low. In this way, the FED freed the banks of a part of the risk by taking it on itself.
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