If there is a recession, the Fed would most likely encourage banks to provide loans by:
A) buying government securities.
B) raising the discount rate.
C) selling government securities.
D) raising the federal funds rate.

Question

Quizplus · Accepted Answer

If there is a recession, the Fed would want to encourage banks to provide loans to stimulate economic activity. To do this, the Fed would buy government securities, which would increase the reserves held by banks and lower interest rates, making it easier for banks to loan out funds.

If There Is a Recession, the Fed Would Most Likely