Question

The Fed may respond to a recession by

discouraging consumer borrowing.
decreasing interest rates.
decreasing government spending.
decreasing available credit.

Answer 1

Decreasing interest rates.

Explanation: In a recession the Fed typically pursues expansionary monetary policy — lowering interest rates (and increasing available credit) to encourage borrowing, spending, and investment. Discouraging borrowing, decreasing available credit, or cutting government spending are contractionary measures (and government spending is fiscal policy, not the Fed's).