During a Depression,the Best Strategy of the Federal Reserve Is

question 6

Multiple Choice

During a depression,the best strategy of the Federal Reserve is to

• A)sell government bonds,to make low-risk,sound assets available for commercial banks to buy.
• B)sell government bonds,in order to reduce the size of the government's deficits.
• C)sell government bonds,in order to increase aggregate demand.
• D)buy government securities.

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Definitions:

Labor Force

The total number of people who are eligible and available to work, including both the employed and the unemployed seeking employment.

Frictional Unemployment

A form of unemployment that occurs when people are between jobs or are entering the workforce for the first time.

Unemployment Rate

The volume of the labor force that is jobless yet engaged in the act of looking for work.

Unemployment Insurance

A government program that provides temporary financial assistance to individuals who have lost their jobs through no fault of their own, helping to mitigate the economic effects of unemployment.