When the Fed injected newly-made money into the economy by buying bonds, it:

Question

Quizplus · Accepted Answer

The Fed's action of injecting newly-made money into the economy by buying bonds is known as quantitative easing, which is a monetary policy tool used to stimulate economic growth and employment. Option B is incorrect because expansionary fiscal policy refers to the government increasing its spending and/or decreasing taxes to stimulate the economy, while the Fed's action was related to monetary policy. Option C is incorrect because the Fed's action was expansionary monetary policy rather than contractionary, which involves reducing the money supply to slow down the economy. Option D is incorrect because raising the reserve requirement means banks would need to hold more reserves, reducing the amount of money they can lend out, which is a contractionary monetary policy tool.

When the Fed Injected Newly-Made Money into the Economy by Buying