If the Fed wishes to stimulate the economy,it could
I. buy U.S. government securities.
II. raise the discount rate.
III. lower reserve requirements.

Question

Quizplus · Accepted Answer

Buying U.S. government securities injects more money into the economy, which can stimulate economic activity. Lowering reserve requirements allows banks to lend out more of their deposits, which can also stimulate economic activity. Raising the discount rate, on the other hand, makes it more expensive for banks to borrow money from the Fed, which can slow economic activity.

If the Fed Wishes to Stimulate the Economy,it Could