During the financial crisis of 20072009, it became difficult for firms to get a loan, whether the

Question:

During the financial crisis of 2007–2009, it became difficult for firms to get a loan, whether the loan was for short-term funding for business inventories or for larger projects.
a. Explain how this increase in credit rationing affected investment.
b. The Federal Reserve created special funding facilities to improve the liquidity of credit markets during this period. These facilities made it easier for firms and households to borrow in financial markets. What was the Fed trying to avoid?