Question

The Fed may respond to a recession by

Answer 1

Recession sucks and the role of lifting a country out of it is often given to the government. Recession has several attributes such as low consumption, investment, government spending, and net export activity. The government may intervene by relaxing monetary policy by increasing money supply, or increasing government spending. The government may also lend money to corporations to help them steer clear from default or collapse.They also decrease interest rates so people will have more cash and so have more spending power.

Answer 2

The correct answer is B) decreasing interest rates.

The other options of the question were A) discouraging consumer borrowing. C) decreasing government spending. D) decreasing available credit.

The Fed may respond to a recession by decreasing interest rates.

In the United States, the Federal Reserve plays the role of the Central Bank and oversees the American financial system and the monetary policy of the country. During a recession, the Fed may respond to a recession by decreasing interest rates to try to promote access to credit in order to reactivate the economy. With a low-interest rate, the Fed is inviting businesses to invest in new projects.