Question

During and after the financial crisis of 2007minus​2009, the Fed greatly increased the supply of reserves through three rounds of quantitative easing by A. purchases of​ long-term Treasury securities and sales of​ mortgage-backed securities. B. sales of both​ long-term Treasury securities and​ mortgage-backed securities. C. sales of​ long-term Treasury securities and purchases of​ mortgage-backed securities. D. purchases of both​ long-term Treasury securities and​ mortgage-backed securities.

Answer 1

Answer:

D) purchases of both​ long-term Treasury securities and​ mortgage-backed securities.

Explanation:

Quantitative easing is basically a large scale purchase of securities carried out by the FED. When the FED purchases long term Treasury securities, or any other type of security including mortgage backed securities, it is increasing the economy's money supply. Since the economy was facing a very deep recession, by increasing the money supply the FED was trying to boost the economy and make it rebound.