ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Inflation
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Recession-Bank is practicing tight money policies.
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Recovery-Bank is practicing expansionary policies.
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None of the above
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Detailed explanation-1: -Do interest rates rise or fall in a recession? Interest rates usually fall during a recession. Historically, the economy typically grows until interest rates are hiked to cool down price inflation and the soaring cost of living. Often, this results in a recession and a return to low interest rates to stimulate growth.
Detailed explanation-2: -In other words, when the Fed increases interest rates, it reduces demand for goods and services, which could result in companies hiring less or laying off their workers and potentially lead to a much-feared recession.
Detailed explanation-3: -When interest rates are higher, banks make more money, by taking advantage of the difference between the interest banks pay to customers and the interest the bank can earn by investing. A bank might pay its customers a full percentage point less than it earns through investing in short-term interest rates.
Detailed explanation-4: -Invest as much as you can. The easiest way to get rich during a recession is to invest as much money into the stock market as you can. Protect your income. Stable income is a key part of personal finance success, including building wealth. Cut back on expenses. 14-Jan-2023