Final answer:
The Federal Reserve can help a struggling economy by lowering interest rates, using quantitative easing, and implementing fiscal policies such as tax rebates. In an overconfident economy, the Fed can raise interest rates to prevent excessive borrowing and inflation.
Step-by-step explanation:
The Federal Reserve has several tools to help both a struggling economy and an overconfident economy. In a struggling economy, the Fed can lower short-term interest rates to encourage borrowing and investment. It can also use quantitative easing, which involves buying bank debt to stimulate lending and boost the economy. Additionally, the Fed can implement fiscal policies such as tax rebates and programs to stabilize household consumption and encourage investment.