Question

What type of policy would the Federal Reserve use if the economy were entering a recession?

Answer 1

The loose monetary policy is the policy that the federal reserve use if the economy were entering into recession. In order for the federal reserve to fight the recession, they should support legislation which has higher taxes for wealth. They should also put into place very strong regulatory rules that banks and cooperation can't get across. 
The three federal reserve tools which are used to undertake an easy monetary policy includes reserve requirement, discount rate, and open market operations. Federal reserve altered monetary policy in order to influence the amount of credit and money in U.S economy and the interest rates.