Federal Reserve Economic Stabilization Quiz
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Questions and Answers

What action could the Federal Reserve take if businesses and consumers become more optimistic about the future of the economy?

  • Sell bonds to lower interest rates
  • Buy bonds to lower interest rates (correct)
  • Sell bonds to raise interest rates
  • Buy bonds to raise interest rates

    • If the goal is to stabilize output, what action should the Federal Reserve take when there is increased optimism about the future of the economy?

  • Sell bonds to raise interest rates
  • Buy bonds to raise interest rates
  • Buy bonds to lower interest rates (correct)
  • Sell bonds to lower interest rates

    • What would be the effect of the Federal Reserve buying bonds to raise interest rates if businesses and consumers became more optimistic about the future of the economy?

  • Stimulate economic activity
  • Lower interest rates
  • Stabilize output
  • Raise interest rates (correct)

    • How could the Federal Reserve respond to increased optimism about the future of the economy in order to stimulate economic activity?

    <p>Buy bonds to lower interest rates</p> Signup and view all the answers

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