Which statement best describes how the Fed responds to recessions?

It sells more securities.

It charges banks more interest.

It increases reserve requirements.

It increases the money supply.

It increases the money supply.

The answer is "It increase the money supply". The Federal Reserve has a few strategies by which to battle the subsidence. Among different measures, the Fed can raise or lower financing costs as monetary conditions require; it can offer and purchase U. S. government obligation - Treasury bills and notes - and it can stretch out money or potentially credit to different monetary establishments.