Question

multiple choice 1 point
the major problem facing the economy is high unemployment and weak economic growth. the inflation rate is low and stable.
therefore, the federal reserve decides to pursue a policy to increase the rate of economic growth. which policy changes by the
fed would reinforce each other to achieve that objective?
○ buying government securities, doing reverse repos, and raising the reserve ratio
○ selling government securities, doing repos, and lowering the discount rate
○ selling government securities, doing reverse repos, and raising the discount rate
○ buying government securities, doing repos, and lowering the discount rate
multiple choice 1 point
the problem of cyclical asymmetry refers to the idea that
○ an expansionary monetary policy can force an expansion of the money supply, but a restrictive monetary policy may not
achieve a contraction of the money supply.
○ the monetary authorities have been less willing to use an expansionary monetary policy than they have a restrictive
monetary policy.
○ cyclical downswings are typically of longer duration than cyclical upswings.
○ a restrictive monetary policy can force a contraction of the money supply, but an expansionary monetary policy may not
achieve an increase in the money supply.

Explanation:

To increase economic growth and address high unemployment (with low - stable inflation), expansionary monetary policy is needed. Buying government securities (open - market purchase) increases the money supply. Repos (repurchase agreements) are short - term, but buying securities is a more direct expansionary tool. Lowering the reserve ratio increases lending capacity (expansionary), while raising it is contractionary. Lowering the discount rate encourages borrowing (expansionary), raising is contractionary. Reverse repos are contractionary.

Answer:

Buying government securities, doing repos, and lowering the discount rate.