Final answer:
Open market operations can be used to increase borrowing during a recession by decreasing interest rates.
Step-by-step explanation:
Open market operations refer to the buying and selling of government securities by the central bank to control the money supply and interest rates in the economy. In the context of a recession, the central bank can use open market operations to stimulate borrowing and spending, thus boosting economic activity.
If the central bank wants to increase borrowing, it can buy government securities from financial institutions, injecting cash into the banking system. This increases the reserves of the banks, allowing them to lend out more money at lower interest rates. Lower interest rates make borrowing more attractive for individuals and businesses, leading to increased borrowing.
Therefore, a decrease in interest rates resulting from open market operations will increase borrowing.
Learn more about Open market operations and borrowing during a recession