1. The Fed will address the scenario with an expansionary policy.
2. A specific monetary action that the Fed might use in this scenario is the reduction in interest rate.
3. A specific fiscal action that Congress might use in this scenario is tac cuts and an increase in government expenditure.
<h3>How to illustrate the information?</h3>
Tax cuts, transfer payments, rebates, and increased government spending on projects such as infrastructure improvements are examples of expansionary fiscal policy. It can, for example, increase discretionary government spending, infusing more money into the economy through government contracts. Tax cuts and increased government spending are two major examples of expansionary fiscal policy.
Monetary policy is a set of actions designed to control a country's total money supply and promote economic growth. Interest rates and bank reserve requirements are two examples of monetary policy strategies. Monetary policy is typically classified as either expansionary or restrictive.
In the United States, monetary policy consists of the Federal Reserve's actions and communications to promote maximum employment, stable prices, and moderate long-term interest rates.
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