A Changing Economy

AP US History· difficulty 4/5

"If we don't do this, we may not have an economy on Monday." — Federal Reserve Chair Ben Bernanke to Congressional leaders, September 2008

Dow Jones Industrial Average, 2007-2010 14k 11k 8k 5k Peak ~14,165 Low ~6,547 Lehman Sep '08 Mar '09 low ARRA Jan'07 Mar'09 Dec'10 Source: Wall Street Journal market data Drop ~54% peak to trough

The federal response to the crash shown above included which signature policy?

  • A

    The Troubled Asset Relief Program (TARP), authorizing up to $700 billion to stabilize banks

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  • B

    Deregulation of the airline and trucking industries

  • C

    The Volstead Act restricting alcohol production

  • D

    The Sherman Antitrust Act enforcement against tech firms

Explanation

TARP, signed by Bush in October 2008, authorized large purchases of distressed mortgage-backed securities and bank equity to prevent broader financial collapse. It was followed by Obama's $787 billion stimulus (ARRA, 2009).

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