The fed may respond to a recession by

The correct answer is B) decreasing interest rates.

The other options of the question were A) discouraging consumer borrowing. C) decreasing government spending. D) decreasing available credit.

The Fed may respond to a recession by decreasing interest rates.

In the United States, the Federal Reserve plays the role of the Central Bank and oversees the American financial system and the monetary policy of the country. During a recession, the Fed may respond to a recession by decreasing interest rates to try to promote access to credit in order to reactivate the economy. With a low-interest rate, the Fed is inviting businesses to invest in new projects.

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