Why, with the monetary policy tools it had used prior to the financial​ crisis, could the Fed not control the federal funds​ rate? (A) The Fed would have needed to conduct a massive open market purchase of government securities. (B) Investor and consumer behavior was not conforming to normal patterns. (C) Using the tools the Fed had available would have disrupted the financial system. (D) Reserves would have needed to be increased by too large an amount.

(B) Investor and consumer behavior was not conforming to normal patterns.

During the financial crisis, the traditional monetary policy tools used by the Federal Reserve were less effective in controlling the federal funds rate due to abnormal behavior in the financial markets. Normally, the Fed uses tools like open market operations, the discount rate, and reserve requirements to influence the federal funds rate, which is the rate at which banks lend to each other overnight. However, during the financial crisis, investors and consumers did not respond to these policy actions as they normally would, due to heightened uncertainty and risk-aversion. Panic and a lack of confidence led to a breakdown in normal lending and borrowing activities, meaning that traditional monetary policy actions had a diminished effect on the federal funds rate.