which statement best describes how the fed responds to recessions?\n\n- it sells more securities.\n- it…
which statement best describes how the fed responds to recessions?\n\n- it sells more securities.\n- it charges banks more interest.\n- it increases reserve requirements.\n- it increases the money supply.
Answer
Brief Explanations:
During a recession, the Federal Reserve (the Fed) implements expansionary monetary policy to stimulate economic growth. This is achieved by increasing the money supply, which lowers interest rates and encourages borrowing and spending by consumers and businesses. The other options listed—selling securities, charging more interest (raising the discount rate), and increasing reserve requirements—are contractionary measures used to slow down an overheating economy and combat inflation.
Answer:
It increases the money supply.