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If there is a recession, the Fed would most likely: Question 15 options: a) increase bank reserves by raising the discount rate. b) increase bank reserves by buying government securities. c) decrease bank reserves by raising the discount rate. d) decrease bank reserves by selling government securities.

Respuesta :

Answer:

Option C.

Explanation:

In the situation of recession, Federal reserve system try to increase money supply to maintain money flow in the economy.

Fed like to decrease interest rates and increase discount rate in the case of recession for economic growth.

So, fed decrease bank reserves by raising the discount rate.  

Therefore, the correct option is C.

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