Final answer:
During a recession, the Federal Reserve should use expansionary monetary policy to combat deflation and stimulate economic growth.
Step-by-step explanation:
During a recession, when inflation is declining, the Federal Reserve should use expansionary monetary policy to combat deflation. This involves lowering interest rates and increasing the money supply to stimulate economic growth. By doing so, the Federal Reserve encourages borrowing and spending, which helps to stimulate the economy during a recessionary period. This approach was taken by the Federal Reserve during the Great Recession of 2008, when interest rates were slashed to near-zero levels to stimulate economic activity.