During a recession, policy makers who use the AS/AD model would probably recommend an open market:
A)sale of government securities that reduces interest rates.
B)purchase of government securities that reduces interest rates.
C)sale of government securities that raises interest rates.
D)purchase of government securities that raises interest rates.

Question

Quizplus · Accepted Answer

During a recession, policy makers aim to stimulate economic activity. An open market purchase of government securities increases the money supply, which typically reduces interest rates. Lower interest rates encourage borrowing and investment, helping to stimulate the economy.

During a Recession, Policy Makers Who Use the AS/AD Model