Which statement best describes how the fed responds to recessions

Posted By Admin @ September 03, 2022

Question:

Which statement best describes how the Fed responds to recessions?

a. It sells more securities.
b. It charges banks more interest.
c. It increases reserve requirements.
d. It increases the money supply.

Answer:

The correct answer is option D " It increases the money supply.". Federal Reserve manages the money of the entire nation and most of the financial institutions in the country. By creating money during recessions, the Fed stimulates the domestic market which helps to move the money and overcome recessions.

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