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