THE GREAT DEPRESSION 1929 1940
THE GREAT DEPRESSION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They raise interest rates to encourage saving
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They keep a tight rein on the money supply
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They make money available to individuals and businesses
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They don’t do anything; the market corrects itself
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Detailed explanation-1: -To help accomplish this during recessions, the Fed employs various monetary policy tools in order to suppress unemployment rates and re-inflate prices. These tools include open market asset purchases, reserve regulation, discount lending, and forward guidance to manage market expectations.
Detailed explanation-2: -When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down. When inflation is too low, the Federal Reserve typically lowers interest rates to stimulate the economy and move inflation higher.
Detailed explanation-3: -The Federal Reserve can stimulate a sluggish economy by imposing an expansionary monetary policy. The Federal Reserve, through open market operations, can purchase securities in an open market.
Detailed explanation-4: -Promoting Financial System Stability The Federal Reserve monitors financial system risks and engages at home and abroad to help ensure the system supports a healthy economy for U.S. households, communities, and businesses.
Detailed explanation-5: -The Fed can increase the money supply by lowering the reserve requirements for banks, which allows them to lend more money. Conversely, by raising the banks’ reserve requirements, the Fed can decrease the size of the money supply.