Which of the following was an example of government intervention during the Great Recession?
A. Cutting all government spending
B. Doing nothing to help businesses
C. Creating the Troubled Asset Relief Program (TARP)
D. Increasing interest rates immediately
Answer (2)
The correct answer is C. Creating the Troubled Asset Relief Program (TARP)During the Great Recession (2007–2009), the U.S. government intervened to stabilize the economy. One major action was the creation of TARP, a program designed to purchase troubled assets from banks to restore confidence in the financial system and prevent further collapse. It was a form of direct government assistance to businesses, particularly in the banking and auto industries.A is incorrect - The government did not cut all spending; in fact, it increased spending to stimulate the economy.B is incorrect - The government took several steps to help businesses and banks.D is incorrect - The Federal Reserve actually lowered interest rates to encourage borrowing and investment, not increased them.
The correct answer is letter C. Creating the Troubled Asset Relief Program (TARP)TARP was a U.S. government program created in 2008 to help banks and financial institutions that were near collapse. The goal was to restore confidence by giving them capital so they could keep operating and lending money. It was like giving medicine to a very sick patient to stop them from getting worse. Governments in Asia, like South Korea and China, also took similar steps to stabilize their economies by supporting banks and businesses during that time.
