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To address the problem of a recession, the Federal Reserve Bank most likely would take which of the following actions?
Suggested Answer: C
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Choice 'c' is correct. Return on investment equals net income divided by average invested capital:
Choices 'a', 'b', and 'd' are incorrect, per the above calculation.
47 comments · newest first
SH
Shantell
10 months ago
D would just tighten things up even more, not helpful!
JO
Joanna
11 months ago
Wait, lowering the discount rate? Is that really enough?
CO
Colette
11 months ago
C would just make things worse, right?
AR
Aracelis
11 months ago
I disagree, B would make more sense in a recession.
BO
Bobbie
11 months ago
A is definitely the right move!
LA
Larae
12 months ago
I feel like increasing reserve requirements would actually restrict lending, which isn't what we want during a recession, right?
KR
Kristine
12 months ago
Increasing the federal funds rate seems counterintuitive in a recession, but I can't recall the exact reasoning behind it.
AN
Anglea
12 months ago
I remember a practice question where selling government bonds was the right answer for tightening the economy, but that doesn't seem to fit here.
BE
Bette
1 year ago
I think lowering the discount rate makes sense during a recession to encourage banks to lend more, but I'm not entirely sure.
NO
Noah
1 year ago
I feel pretty confident that the answer is B - selling U.S. government bonds. That would tighten the money supply and help curb inflation during a recession.
FR
Freeman
1 year ago
I'm a bit confused on this one. The Fed has a few different monetary policy tools, but I'm not certain which one would be most effective for addressing a recession. I'll have to review my notes.
GA
Gail
1 year ago
Okay, I've got this. The Fed would want to increase the money supply to boost economic activity, so the right answer is A - lowering the discount rate.
NO
Novella
1 year ago
Hmm, this is a tricky one. I'm not totally sure about the Fed's toolkit for recessions. I'll have to think through the options carefully.
AI
Aide
1 year ago
I think the key here is to focus on the Federal Reserve's typical actions to address a recession. Lowering the discount rate seems like the most direct way to stimulate the economy.
LO
Lon
1 year ago
This looks like a pretty straightforward disaster recovery question. I think I can handle this one - the key is to identify the solution that meets all the requirements like cost optimization, guaranteed capacity, and the RPO/RTO targets.
CH
Chau
1 year ago
I recall that standard deviation isn't a measure of central tendency, but isn't it often confused with the mean? Feels tricky!
MI
Ming
1 year ago
Hmm, I'm not too sure about this one. I'll need to review my notes on WiFi security protocols before making a decision. Better play it safe and mark this one for review.
SH
Sharen
1 year ago
I feel like option B might give too many privileges to Rubio and Doe. I think options A or D limit access better, but I'm leaning towards A.
JU
Jules
1 year ago
Hmm, the Fed lowering rates to address a recession? What is this, the 1980s?
LI
Lisbeth
1 year ago
D) Increase the level of funds a bank is legally required to hold in reserve.
ST
Staci
1 year ago
B) Sell U.S. government bonds in open-market transactions.
MI
Miss
1 year ago
A) Lower the discount rate it charges to banks for loans.
BE
Bettina
1 year ago
I was going to say C) Increase the federal funds rate, but that would be counterproductive in a recession. Gotta love these tricky Fed questions!
CH
Charlesetta
1 year ago
A) Lower the discount rate it charges to banks for loans.
KR
Kristine
1 year ago
Increasing reserve requirements could actually worsen a recession by limiting lending.
CH
Charolette
1 year ago
D) Increase the level of funds a bank is legally required to hold in reserve.
KR
Kristine
1 year ago
Selling bonds can also inject money into the economy, good choice!
YO
Yolande
1 year ago
B) Sell U.S. government bonds in open-market transactions.
NI
Nicolette
1 year ago
That's correct! Lowering the discount rate can help stimulate borrowing and spending.
KA
Katy
1 year ago
A) Lower the discount rate it charges to banks for loans.
PA
Paris
1 year ago
D) Increasing the reserve requirement is a way to tighten the money supply, but I don't think that's the best approach during a recession.
VA
Valentin
1 year ago
But wouldn't selling bonds decrease the money supply and potentially worsen the recession?
MA
Malika
1 year ago
I disagree, I believe the answer is B) Sell U.S. government bonds.
VA
Valentin
1 year ago
I think the answer is A) Lower the discount rate.
FE
Fernanda
1 year ago
B) Selling U.S. government bonds seems like the right move to me. That would reduce the money supply and help curb inflation.
AL
Alline
1 year ago
B) Selling U.S. government bonds could indeed help reduce the money supply and control inflation.
SY
Sylvie
1 year ago
A) Lowering the discount rate could also stimulate borrowing and spending, which could help boost the economy.
ER
Ernie
1 year ago
B) Selling U.S. government bonds could indeed help reduce the money supply and control inflation.
MA
Ma
1 year ago
A) Lowering the discount rate could also stimulate borrowing and spending, which could help boost the economy.
MA
Marisha
1 year ago
That's a good point, selling bonds could also help stimulate the economy.
SY
Sylvie
1 year ago
I disagree, I believe they would sell U.S. government bonds in open-market transactions to address the recession.
MA
Marisha
2 years ago
I think the Federal Reserve Bank would lower the discount rate to help with a recession.
JA
Jaclyn
2 years ago
I think the answer is A) Lower the discount rate. The Federal Reserve typically lowers interest rates to stimulate the economy during a recession.
DE
Dean
1 year ago
Increasing the level of funds banks are required to hold in reserve could restrict lending.
BR
Brynn
1 year ago
Increasing the federal funds rate might have the opposite effect.
SO
Socorro
1 year ago
But selling U.S. government bonds could also be a way to address a recession.
TW
Twana
1 year ago
I agree, lowering the discount rate can help stimulate the economy.