1. In a 2008 article, the FEDs intention to buy the equivalent of most of the new Treasury debt issued to maintain an open & active market (stabilize) is referred to as ______________ monetary policy:

a. defensive (action to maintain achievement of current goals)

b. offensive (action to change the direction of monetary policy)

c. reactionary (action taken without clear policy intentions stated)

d. precautionary (action in expectation of some unknown events)

2. During the Great Recession (2008-2010) , the portfolio of federal bonds amassed [by the FED] during 2009 will swellabout doubling. This is in contrast to the FED initial action to the 2007-8 crisis when one asset account was reduced and the funds shifted into another asset account of the FED to meet the liquidity needs of the marketplace:

a. FED expanded the money supply without expanding either the Loan or Security Portfolio on its balance sheet.

b. FED forced gold prices to record prices to provide the collateral to print additional money.

c. FED increased its security holdings associated with US Treasuries, repos, acceptances, foreign securities, and foreign currencies.

d. FED sold US Treasuries from its portfolio and expanded loans to record high amounts.