Question

According to the Fed, what were the major problems during the financial crisis of 2008? Check all that apply.

The money supply became less liquid.
Consumer spending increased dramatically.
Lending and credit stopped.
Banks were too easily able to fulfill consumer demands for loans.
It was difficult for banks to receive the loans needed to have cash required to function.

Answer 1

Correct answers:
- The money supply became less liquid.
- Lending and credit stopped.
- It was difficult for banks to receive the loans needed to have cash required to function.

Explanation: The Fed describes the 2008 crisis as a severe liquidity and funding crisis — credit markets seized up, interbank and wholesale funding dried up, and many banks had trouble obtaining short‑term loans. The other two choices are incorrect: consumer spending did not surge, and banks were not easily able to meet loan demand (they tightened lending).