The Fed's countercyclical policy during expansion and prosperity includes:
A) raising the required reserve ratio, raising the discount rate, and selling government bonds on the open market.
B) raising the required reserve ratio, raising the discount rate, and buying government bonds on the open market.
C) raising the required reserve ratio, cutting the discount rate, and selling government bonds on the open market.
D) lowering the required reserve ratio, cutting the discount rate, and buying government bonds on the open market.

Question

Quizplus · Accepted Answer

During expansion and prosperity, the Fed implements countercyclical policies to prevent the economy from overheating. This includes raising the required reserve ratio and the discount rate, and selling government bonds on the open market to decrease the money supply and cool down economic activity.

The Fed's Countercyclical Policy During Expansion and Prosperity Includes