If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?
A)decrease the required reserve ratio
B)decrease the interest rate the Fed pays on bank reserves
C)buy government bonds
D)all of the above

Question

If unemployment is the major problem in the economy, which of the following would be an appropriate monetary policy response?​
A)​decrease the required reserve ratio
B)​decrease the interest rate the Fed pays on bank reserves
C)​buy government bonds
D)​all of the above

Quizplus · Accepted Answer

All three choices could be appropriate monetary policy responses to tackle unemployment. Decreasing the required reserve ratio would encourage banks to lend more, which could lead to increased spending and hiring. Decreasing the interest rate the Fed pays on bank reserves would discourage banks from holding excess reserves and instead encourage lending. Buying government bonds would increase the money supply and lower interest rates, making it easier for businesses and consumers to borrow, spend, and invest, creating job opportunities. Therefore, all of the above options could help reduce unemployment.

If Unemployment Is the Major Problem in the Economy, Which