Question

How did the financial crisis of 2007–2009 affect the size and composition of the balance sheet of the Federal Reserve?

Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click the option twice to empty the box.

• The Fed narrowed the range of assets held to include safer instruments.
• On the liability side of the balance sheet, commercial bank deposits rose dramatically.
• On the liability side of the balance sheet, commercial bank deposits declined dramatically..
• The Fed broadened the range of assets held to include riskier instruments.
• The assets on the Federal Reserve's balance sheet decreased by 2.5 times, mostly in the form of loans.
• The assets on the Federal Reserve's balance sheet increased by 2.5 times, mostly in the form of securities.

Answer 1

Ans The assets on the Federal Reserve's balance sheet increased by 2.5 times, mostly in the form of securities.

The financial crisis of 2007–2009 affect the size and composition of the balance sheet of the Federal Reserve as the assets on the Federal Reserve's balance sheet increased by 2.5 times, mostly in the form of securities.