Final answer:
The main tool of expansionary monetary policy used by the Fed since the financial crisis of 2008 has been quantitative easing, which entails purchasing long-term securities to stimulate the economy.
Step-by-step explanation:
Since the financial crisis of 2008, the main tool of expansionary monetary policy used by the Federal Reserve has been quantitative easing. Quantitative easing (QE) is a method by which central banks purchase long-term government and private mortgage-backed securities to make credit more available, aiming to stimulate the aggregate demand of the economy. This unconventional monetary policy was adopted because the Federal Reserve had already reduced interest rates to nearly zero and needed a different approach to further stimulate economic growth.
QE differs from traditional monetary policy in that it involves purchasing longer-term securities rather than short-term Treasury bills, specifically to address situations where short-term rates cannot be lowered further. During the 2008-2009 recession, and again in 2020, quantitative easing was vital for expanding the supply of credit and supporting economic activity and job creation by making financial conditions more accommodative.