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) print more currency.

Question

Quizplus · Accepted Answer

buying bonds through open market operations increases the money supply and encourages economic growth, which can help to alleviate a recession. Increasing the discount rate or reserve requirement would have the opposite effect and could potentially worsen the recession. Printing more currency without any underlying increase in economic activity can lead to inflation.

If the Economy Is in a Recession, the Fed Is