Question

You are worried that the economy is facing a downturn. What actions can you take using the Federal Reserve?

Answer 1

The Federal Reserve is America's central bank. As such, it can introduce various economic policies to tackle a downturn and stimulate the economy, such as:

• Raising or lowering interest rates;
• Extending cash or credit to financial institutions;
• Selling or buying U.S. government debt (Treasury notes and bills.)

Answer 2

The Federal Reserve is responsible for money related arrangement for the United States. Fiscal arrangement needs to do with controlling the supply of cash to either help the economy or moderate it. For this situation, the economy is not doing all around ok.