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 increases the money supply and encourages economic growth, while raising the discount rate makes borrowing more expensive, which can slow down economic growth. These actions offset each other.

The Major Problem Facing the Economy Is High Unemployment and Weak