Using the information in the above table, the value of M2 is ...

[aabwk4]

Using the information in the above table, the value of M2 is
 
  A) 3,600. B) 3,500. C) 5,500. D) 4,500.

Question 2

How did the Troubled Asset Relief Program (TARP) help the banks in the U.S. during the financial crisis of 2007-2009?
 
  What will be an ideal response?

[batool]

Answer to Question 1

A

Answer to Question 2

At the peak of the 2007-2009 financial crisis, the U.S. Congress passed emergency legislation authorizing the Treasury Department to spend 700 billion to stabilize the financial system. Of the 700 billion in TARP funds, 115 billion was used to increase the capital of the eight largest U.S. banks, which were all forced to participate. In essence, the banks were required to issue new shares that the government bought. Some of the banks didn't like this plan, since the government became a partial owner. In addition, all eight banks were obligated to limit the compensation of their senior executives. An additional 135 billion was used to increase the capital of smaller banks that applied for TARP support. These bank capital infusions  totaling 250 billion  gave the participating banks breathing room, and the financial system as a whole stabilized.