The economy in the United States has been lagging and is in danger of falling into a recession or even a depression. Based on historical actions, which of the following is the Fed most likely to do as a primary means to control the economy?

Question

Quizplus · Accepted Answer

Based on historical actions, the Fed is most likely to buy government securities as a primary means to control the economy during a recession or depression. This action increases the money supply, which can help stimulate economic activity by making it easier for consumers and businesses to obtain credit. Lowering the reserve requirement or prime rate may also be used, but these actions are typically seen as secondary measures to buying government securities. Raising the discount rate or selling government securities would have the opposite effect by decreasing the money supply and could potentially make the economic situation worse.

The Economy in the United States Has Been Lagging and Is