Question

The Fed may respond to a recession by

Answer 1

Answer:

The Federal Reserve, which is the Central Bank for the United States, might respond to a recession by decreasing interest rates. The hope is that by decreasing interest rates, access to credit and capital will increase that will.

Answer 2

The Fed may respond to a recession by increasing the money supply.

• The Fed is also known as the "lender of last resort". This is because when a bank has less money, it lends its finances to keep the customers satisfied and prevent chaos.
• The Fed also pays a sum of money as interest. It is the money accumulated as interest on the money that is in the reserve.
• The Fed also affects the banks' liquidity.

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