When a Recession Hits, We Would Expect the Government to Run

question 207

Multiple Choice

When a recession hits, we would expect the government to run a budget deficit by raising the level of its spending or by cutting taxes, or perhaps both. The Fed would be expected to:

• A) reduce the required reserve ratio, increase the discount rate, and buy securities on the open market.
• B) reduce the required reserve ratio, reduce the discount rate, and sell securities on the open market.
• C) reduce the required reserve ratio, reduce the discount rate, and buy securities on the open market.
• D) increase the required reserve ratio, reduce the discount rate, and sell securities on the open market.
• E) increase the required reserve ratio, increase the discount rate, and sell securities on the open market.

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Definitions:

Dynamic Icons

Icons on computer or mobile interfaces that change appearance based on context, status, or interaction.

Picture Property

Characteristics or attributes of a digital image, such as size, resolution, and color depth.

Asterisk

A typographical symbol (*) used for various purposes, including indicating footnotes, corrections, omissions, and multiplication in mathematics.

Quota

A fixed share or limit of items or resources that can be allocated, produced, or consumed.