Which of the following actions by banks, in coordination with the Federal Reserve, is most likely to protect the economy during a financial crisis?
A
Restricting lending and holding excess reserves
B
Raising interest rates to reduce borrowing
C
Increasing lending by infusing money into the economy
D
Selling government securities to decrease the money supply
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검증된 단계별 안내
1
Step 1: Understand the role of banks and the Federal Reserve during a financial crisis. The goal is typically to stabilize the economy by ensuring liquidity and encouraging economic activity.
Step 2: Analyze the effect of restricting lending and holding excess reserves. This action reduces the money circulating in the economy, which can worsen a crisis by limiting credit availability.
Step 3: Consider the impact of raising interest rates. Higher rates make borrowing more expensive, which tends to slow down economic activity and is usually used to combat inflation, not a crisis.
Step 4: Examine the effect of increasing lending by infusing money into the economy. This action increases the money supply, encourages borrowing and spending, and helps stimulate economic growth during a downturn.
Step 5: Review the consequences of selling government securities to decrease the money supply. This action withdraws money from the economy, which can further contract economic activity during a crisis.