The economy is slowing down and unemployment is high.Which of the following is the Fed most likely to do?
A) print more money
B) raise the discount rate
C) increase the reserve requirement
D) buy government securities

Question

Quizplus · Accepted Answer

The Fed is likely to buy government securities to increase the money supply and stimulate the economy during a slowdown. This action will increase the availability of credit and reduce interest rates, which will encourage borrowing and investment, leading to economic growth and job creation. Printing more money may cause inflation, raising the discount rate would discourage borrowing and investment, and increasing the reserve requirement would reduce the amount of money banks can lend, all of which could exacerbate the economic slowdown.

The Economy Is Slowing Down and Unemployment Is High