The major problem facing the economy is high unemployment and weak economic growth.The inflation rate is low and stable.Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth.Which policy changes by the Fed would tend to offset each other in trying to achieve that objective?

Question

Quizplus · Accepted Answer

Buying government securities is an expansionary policy to increase money supply and stimulate growth, while raising the discount rate is a contractionary policy that can reduce borrowing and slow growth. These actions offset each other.

The Major Problem Facing the Economy Is High Unemployment and Weak