Question

Suppose the Federal Reserve announces that it will be making a change to a key interest rate to increase the money supply. This is likely because

Answer 1

Answer:

The Federal Reserve is worried about unemployment

Explanation:

The Federal reserve uses various strategies bro control supply of money in the economy. This is aimed at improving the economy depending on its present state.

In an economy where there is inflation there is need to reduce money supply.

When economic growth is slow there is need to increase money supply.

So when the Federal Reserve increases money supply by reducing interest rates, it is most likely to combat unemployment and facilitate economic growth.