Anonymous asked in Social ScienceEconomics · 8 years ago

2. The Federal Reserve Banks buy $2 billion of securities from commercial banks. Based on this action, answer?

a) Is the economy in a recession or an expansion?

b) Explain in a few sentences what the impact of this action will have on the economy.

1 Answer

  • Anonymous
    8 years ago
    Favorite Answer

    a. recession.The FED is trying to increase money supply.It is an expansion policy during recession.

    b. the fund rate will decline.The banks will have more reserves,and can give more loans. private investment will increase. price and real income will increase.

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