In September 2012 unemployment was high and the Fed was concerned that the economy would re-enter a recession.Therefore the Fed announced it would ________ its purchases of securities in an effort to ________.

Question

Quizplus · Accepted Answer

The Fed's announcement to increase its purchases of securities is known as quantitative easing (QE). The purpose of QE is to inject more money into the economy, which can help keep interest rates low and encourage borrowing and spending. This can help stimulate economic growth and prevent a recession. Therefore, B is the correct choice as it states that the Fed would increase its purchases of securities and keep the federal funds rate low.

In September 2012 Unemployment Was High and the Fed Was