Ask Question
BusinessBusiness
20 August, 03:29

If the Fed believes the economy is about to fall into recession, it should A. use an expansionary fiscal policy to increase the interest rate and shift AD to the right. B. use its judgment to do nothing and let the economy make the self adjustment back to potential GDP. C. use a contractionary monetary policy to lower the interest rate and shift AD to the left. D. use an expansionary monetary policy to lower the interest rate and shift AD to the right.

+3
Answers (1)
  1. 20 August, 05:37
    0
    D. use an expansionary monetary policy to lower the interest rate and shift AD to the right.

    Explanation:

    Recession occurs when people do not have money to buy, and that the demand accordingly of each goods falls below.

    This clearly reduces money in market as the chain of sale and purchase is low.

    To come out of this situation, the Federal Bank, that is central bank responsible for making policies for economy of the country shall take steps.

    In this situation the Fed shall reduce the interest rates on borrowings which will attract people to borrow and then there will be money in the hands of people.

    Further as people will have the buying power the demand for goods will also increase accordingly the Aggregate Demand curve will also move to right.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “If the Fed believes the economy is about to fall into recession, it should A. use an expansionary fiscal policy to increase the interest ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Jessica's manager believes that Tres Tortillas can gain an advantage over competing Mexican restaurants in the area by capitalizing on the higher demand for salsa.
Answers (1)
12. Motor Works, Inc. has declared a $20,000 cash dividend to shareholders. The company has 5,000 shares of $15-par, 10% preferred stock and 10,000 shares of $20-par common stock. The preferred stock is cumulative.
Answers (1)
View Policies Current Attempt in Progress Bonita Industries applies overhead on the basis of machine hours.
Answers (1)
Why might a business desire fewer customers over more customers? shouldnt the focus of marketing be to acquire as many customers as possible?
Answers (1)
Anne Mulcahy, Xerox CEO, has been successful in turning the company around, in part because of the skills she learned when she started out as a sales representative. Your book suggests that the objective of personal selling should be toA.
Answers (1)
New Questions in Business
On January 1, 20X8, Package Company acquired 80 percent of Stamp Company's common stock for $280,000 cash.
Answers (1)
Tombert Decorating uses a job order cost system to collect the costs of its interior decorating business. Each client's consultation is treated as a separate job. Overhead is applied to each job based on the number of decorator hours incurred.
Answers (1)
Suppose that cookie producers create a positive externality equal to $2 per dozen. What is the relationship between the equilibrium quantity and the socially optimal quantity of cookies to be produced? a. They are equal. b.
Answers (1)
Comfort Cloud manufactures seats for airplanes. The company has the capacity to produce 100,000 seats per year, but currently produces and sells 75,000 seats per year.
Answers (2)
In 2016, teller company sold 3,000 units at $600 each. variable expenses were $420 per unit, and fixed expenses were $240,000. what was tellers 2016 net income?
Answers (1)
Home » Business » If the Fed believes the economy is about to fall into recession, it should A. use an expansionary fiscal policy to increase the interest rate and shift AD to the right. B.
Sign Up Forgot Password?