To A. increase; lower the reserve requirements B. decrease; lower the discount rate C. increase; raise the federal funds rate D. decrease; conduct open-market purchases E. increase; lower income taxes.
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Mind Expander
During the Great Depression, the Federal Reserve lowered reserve requirements and conducted open-market purchases to inject liquidity into the economy. This historical move highlights how central banks can influence economic activity by adjusting monetary policy tools to either stimulate growth or curb inflation. In modern times, central banks often conduct open-market operations, like buying government securities, to manage the money supply effectively. For instance, during the COVID-19 pandemic, the Fed implemented these strategies to support economic recovery, showcasing how adaptive monetary policy can address pressing economic challenges.
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