The Federal Reserve is anticipating a contractionary period in the economy. The Fed decides to engage in open market operations to stimulate the economy. This action is

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Engaging in open market operations to stimulate the economy is an example of active policymaking, as the Fed is taking deliberate action to influence the economy. This contrasts with passive policymaking, which involves simply allowing the economy to run its course without intervention. The monetary and nondiscretionary rules are specific policy frameworks that guide the actions of the Fed, but they do not dictate specific actions such as open market operations.

The Federal Reserve Is Anticipating a Contractionary Period in the Economy