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The reform measure that established essential funds from which banks can borrow is called:

(A) FDIC Improvement Act
(B) Federal Reserve Act
(C) Glass-Steagall Act
(D) Troubled Asset Relief Program (TARP)

1 Answer

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Final answer:

The reform measure that provided essential funds for banks to borrow from is the Federal Reserve Act (Option B). It helped increase the available pool of funds for lending and impacted interest rates and the value of the U.S. dollar.

Step-by-step explanation:

The reform measure that established essential funds from which banks can borrow is known as the Federal Reserve Act (Option B). This act was instrumental in creating the central banking system of the United States, and part of its many functions included setting up mechanisms through which financial institutions could access funds. It established the Federal Reserve Bank's ability to purchase both traditional and nontraditional assets off banks' balance sheets.This action by the Fed increased the amounts of funds available to lend to businesses and consumers and lowered the short-term interest rates, sometimes to zero percent. This had the effect of devaluing the U.S. dollar in the global market and promoting exports. Additionally, it is important to recognize other measures such as the Troubled Asset Relief Program (TARP), passed in late 2008, which allowed the government to inject cash into troubled banks, and the Federal Deposit Insurance Corporation (FDIC), which increased depositor confidence in the stability of the banking system by insuring deposits up to a certain amount.

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