If the economy is in a recession,the Fed is likely to:
A)buy bonds through open market operations.
B)increase the discount rate.
C)increase the reserve requirement.
D)The Fed is likely to do any of these during a recession.

Question

Quizplus · Accepted Answer

During a recession, the Fed is likely to implement expansionary monetary policy to stimulate economic growth. One way to do this is by buying bonds through open market operations, which increases the money supply, lowers interest rates, and encourages borrowing and spending. Increasing the discount rate and reserve requirement, on the other hand, would have the opposite effect by reducing the money supply and increasing borrowing costs. Therefore, choice A is the best answer.

If the Economy Is in a Recession,the Fed Is Likely