Question

Read the following economic scenario. Use the monetary policy of open market

operations to solve a recession.
How will this change in borrowing affect consumer spending in the economy?
O Spending is reduced
O Spending increases

Answer 1

To solve a recession, open market operations can be used to stimulate consumer spending in the economy by injecting money and lowering interest rates.

Step-by-step explanation:

In order to solve a recession, the monetary policy of open market operations can be used to stimulate consumer spending in the economy. Open market operations involve the buying and selling of government securities by the central bank. To address a recession, the central bank can buy government securities, which injects money into the economy and lowers interest rates. This encourages borrowing and spending by consumers.

Learn more about The impact of open market operations on consumer spending in a recession