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O.a. What can the Federal Reserve System do to correct a credit crunch? Lower the reserve requirement to encourage more lendi
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Under the credit crunch, the economy faces huge liquidity crisis. There is a need for an immediate action to be taken by the Fed to resolve the issue. As a solution, the Fed can purchase the government bonds or securities in order to inject money into the economy. This will raise the banks reserves and their ability to give loans to general public. Hence, the expansion in the money supply through purchase of T-bills would resolve the issue of Credit Crunch.

Option d. is correct

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