- The Federal Reserve can use open market operations to buy or sell government securities in order to control the money supply and interest rates.
- The Federal Reserve can adjust reserve requirements, which are the amount of funds that banks must hold in reserve against certain deposits, to influence the amount of money that banks can lend.
- The Federal Reserve can use discount rate changes to encourage or discourage banks from borrowing from the central bank.
- The Federal Reserve can engage in quantitative easing, which involves purchasing large quantities of long-term securities to lower long-term interest rates and stimulate economic activity.
- The Federal Reserve can communicate its policy intentions effectively to guide market expectations and influence economic behavior.
- The Federal Reserve can collaborate with other central banks to coordinate monetary policies and stabilize the global economy.
What methods could the Federal Reserve use to stabilize the economy?(1 point)
Responses
The Federal Reserve increases interest rates to incentivize banks to lend.
The Federal Reserve increases interest rates to incentivize banks to lend.
The Federal Reserve provides loans to banks that cannot obtain loans to prevent shortages in cash.
The Federal Reserve provides loans to banks that cannot obtain loans to prevent shortages in cash.
The Federal Reserve prevents banks from lending who do not have the reserves to lend.
The Federal Reserve prevents banks from lending who do not have the reserves to lend.
The Federal Reserve issues money to individuals to stimulate the economy.
1 answer