1) Ever since 2009, the Fed has started paying banks interest on their excess reserves. This program was known as IOER. This gives banks a small incentive to reduce their lending activity

True or False

2) The Fed created theTALFprogram during March 2009. What did it do? (Free Gift: Answer the Fed bought bad sub-prime loans from banks to help give them relief).

A) Transnational Aid Loan Fund (TALF) made loans to foreign banks to help them.

B) The Fed's Troubled Asset Lending Facility (TALF) mostly bought bad subprime loans from banks so that the banks could get some relief from the bad subprime home loans they owned.

C) None of the above.

D) The Fed's TALF Program just bought bank stocks in order to give the Fed some ownership in the banks they were regulating.

3) If the Fed Funds Rate started to rise, and if the Federal Reserve Bank wanted to have lower loan interest rates, then it could use their Open Market Operations tool andsell U.S. government bonds. This action would help to lower loan interest rates.

True or False