Suppose there is a financial crisis. What will the Fed do to stimulate the financial system?...
Suppose there is a financial crisis. What will the Fed do to stimulate the financial system?
A. Open market purchases
B. Raise the discount rate
C. Increase reserve requirement
D. Open market sales
Homework Answers
When there is financial crisis, Fed will have to take a conservative stand to ease the monetary policy and stimulate the financial system. This means there needs to be further liquidity injected into the system. Open market purchases are operations undertaken by the fed to purchase government securities from the banks in exchange for money and to influence interest rates.
Answer is A) Open Market Purchases
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Suppose there is a financial crisis. What will the Fed do to
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*ease not easy. thank you!
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