Question

Countercyclical monetary policy means that _________________. Select the correct answer below: the Fed lowers interest rates during recessions and raises them during economic booms the Fed raises interest rates during recessions and lowers them during economic booms the Fed lowers interest rates during both recessions and economic booms the Fed raises interest rates during both recessions and economic booms

Answer 1

the Fed lowers interest rates during recessions and raises them during economic booms

Step-by-step explanation:

Countercyclical monetary policy is a monetary policy used to work against any cyclical tendencies in order to slow down the economy when it is booming, and to stimulate economic activity then there is a recession.

Example of such policy is therefore a reduction of interest by the Fed during recessions and an increase of interest rate when there are economic booms.