Question

Now, write a paragraph explaining how the Fed responded to the financial crisis that began in 2008. Be sure to include how the Fed protected banks and why this was so important.

Answer 1

The federal government helped banks by protecting them from losses. They paid back some of their debts and gave them money to get them out of issues, which basically means that the tax payers saved the banks. It was done to prevent an even bigger economic collapse and people from losing all the money that was in the banks.
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Answer 2

The Fed responded to the crisis by lending money to banks. This ensured that banks had the capital needed to continue daily operations. Additionally, the Fed lowed the federal funds rate. The actions taken by the Fed helped to lower interest rates in order to encourage borrowing and spark economic growth.