Answer to Question #70855 in Macroeconomics for Darlene

Question

In the United States, the Federal Reserve frequently engages in buying and selling of the government securities as well as other policies. In recent years, the Fed has reduced the Discount Rate several times. The Fed has also purchased substantial amount of government securities. Explain the logic of these actions by the Fed. Why are they doing this and what they hope to accomplish? Take a stand in support or against these actions and state your reasoning. If you were to advise the President, what course of action would you recommend?

Answer 1

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