Final answer:
To encourage expansion during times of predicted job growth and consumer spending, the Federal Reserve is most likely to keep the discount rate low as part of an expansionary monetary policy, which helps lower interest rates, increases the money supply, and boosts economic activity.
Step-by-step explanation:
Economic forecasters predict a long period of job growth and consumer spending. In order to encourage this expansion, the Federal Reserve is most likely to keep the discount rate low. This action is part of an expansionary monetary policy which aims to increase the money supply and lower interest rates, thereby stimulating output and decreasing unemployment. Lower discount rates make it cheaper for banks to borrow money, which can increase lending and ultimately boost economic activity. Additionally, the Fed might buy bonds to increase money supply and lower long-term interest rates, which supports economic activity and job creation.
Historically, during times of economic downturns or to prevent deflation, the Fed has also used quantitative easing to signal its intention to maintain low interest rates by supplying substantial reserves to the banking system. This encourages businesses and consumers to spend and invest, further supporting economic expansion.