The Federal Reserve's policy to "lean against the wind" means that Group of answer choices when price levels are high, the Fed sets a low interest rate. when output is low, the Fed sets a high interest rate. when output is high, the Fed sets a high interest rate. when price levels are low, the Fed sets a high interest rate.

Question

Arely Montgomery

Social Studies

30 August, 00:17

The Federal Reserve's policy to "lean against the wind" means that Group of answer choices when price levels are high, the Fed sets a low interest rate. when output is low, the Fed sets a high interest rate. when output is high, the Fed sets a high interest rate. when price levels are low, the Fed sets a high interest rate.

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Answers (2)

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Tessa Case · Answer 1

First statement

Explanation:

"To lean against the wind" means when there is a flagged economy, a method of boosting the economy is to lean against the wind, which involves the process whereby the federal reserves damps down the prices or boost the economy by reducing interest rate when there are high prices.

Ty Macias · Answer 2

when output is high, the Fed sets a high interest rate.

Explanation:

The Federal Reserve's policy to "lean against the wind" simply implies that as output in the economy go higher, the Feds cautiously increases the interest rate with the purpose of maintaining price stability for a short to medium period when there is a boom in an asset that may be detrimental in the future. This way excessive risk-taking is discouraged in order for people not to over-invest in the period of the boom.