In the event that nominal interest rates cannot be lowered further, the Federal Reserve might rely on________.

Question

Quizplus · Accepted Answer

When nominal interest rates cannot be lowered further, the Federal Reserve might rely on quantitative easing, which involves buying financial assets from banks and other financial institutions to increase the money supply and lower long-term interest rates. This is a way for the Fed to stimulate economic activity when traditional monetary policy tools have been exhausted.

In the Event That Nominal Interest Rates Cannot Be Lowered