In order to compensate for an expected future decline in the Japanese yen relative to the U. S. dollar, the interest rate in Japan must be the interest rate in the United States. fixed relative to equal to higher th

The federal reserve took an expansionary approach during the crisis. this was done by expanding the money supply and boosting liquidity. this can be seen in the fed's actions of lending to banks, purchasing securities, and lowering the federal funds rate in order to lower overall interest rates. the fed's goal was to increase consumer spending and overall liquidity within the system, and they pursued this by expanding the supply of liquid money.