To stimulate an economy that is sluggish, the federal reserve employs various monetary policy tools so as to prevent the prices from falling down as well as prevent unemployment in the country.
During the time of recession, the Federal Reserve has to uphold two simultaneous responsibilities-prevent unemployment and strengthen the prices of commodities, in order to fulfil its mandate and give emergency support to US economy.
The monetary policy tools that it may use can be discount lending, or resorting to open market asset purchases, purchasing the reserves or providing forward guidance to manage market expectations, many of which it has already tried and tested.
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