During a severe downturn in the economy, a central bank would be most likely to:

Question

Quizplus · Accepted Answer

During a severe downturn in the economy, a central bank would cut interest rates and increase liquidity in the markets to encourage borrowing and spending. This can help stimulate economic growth and prevent a deeper recession. Increasing base lending rates or instructing markets to cut back lending could have the opposite effect and make the downturn worse. Managing assets to intentionally lower exchange rates is typically only done in certain circumstances, such as to boost exports, and may not be a suitable response to a severe economic downturn.

During a Severe Downturn in the Economy, a Central Bank