5) In the short run, if the Fed wants to fight a recession, should it buy...
5) In the short run, if the Fed wants to fight a recession, should it buy or sell government securities? Why?
Homework Answers
5. Ans: In the short run, if the Fed wants to fight a recession, it should buy government securities.
The Fed adopts expansionary monetary policy to reduce recession in the economy. So the Fed should buy government securities in the open market operation . So that it leads increase in money supply in the economy. As a result the economy will improve and come out from the recession.
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5) In the short run, if the Fed wants to fight a recession,
should it buy...
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