The correct options that the Fed took in response to the mortgage debt crisis:
2. Lowered the discount rate
3. Raised the reserve ratio
During the mortgage debt crisis, the Federal Reserve responded by adjusting monetary policy to stabilize the economy. Lowering the discount rate was a key measure, encouraging borrowing by reducing the cost for banks to obtain funds.
Simultaneously, the Fed increased the reserve ratio, mandating banks to hold more funds in reserves, limiting lending capacity but enhancing stability. However, the Fed didn't directly influence marginal tax rates during this period.
Quantitative easing, often associated with purchasing financial assets to inject liquidity, wasn't explicitly mentioned in the options. These actions aimed to alleviate the credit crunch and bolster the financial system's health, fostering liquidity while reinforcing banking stability.
complete the question
Which of the following actions did the Fed take in response to the mortgage debt crisis? (Select all that apply)
1.Lowered marginal tax rates
2.Lowered the discount rate
3.Raised the reserve ratio
4.Low