Final answer:
The goal of quantitative easing in late 2008 was to lower long-term interest rates and stimulate the economy during the recession, by making credit more available and by cleaning up the balance sheets of financial institutions.
Step-by-step explanation:
The goal of quantitative easing (QE) that began in late 2008 was to stimulate the economy during the recession when traditional monetary policies, like lowering short-term interest rates, were no longer effective due to rates already being near zero. Quantitative easing involved the Federal Reserve's purchase of long-term Treasury bonds and private mortgage-backed securities to make credit available, and thus stimulate aggregate demand. A key aim was to lower long-term interest rates to encourage borrowing and investment, and to strengthen the financial system by purchasing 'toxic assets' from private firms to clean up their balance sheets.
Significantly, QE represented a departure from traditional monetary policy by including the purchase of private mortgage-backed securities, in addition to government bonds. This move was also intended to support the financial sector during the crisis by removing uncertain and potentially devalued assets from financial institutions. Quantitative easing occurred in multiple phases, with the initial phase (QE1) starting in November 2008, which involved the purchase of $600 billion in mortgage-backed securities from government-sponsored enterprises like Fannie Mae and Freddie Mac.