What action can the Federal Reserve take to reduce unemploym

What action can the Federal Reserve take to reduce unemployment? I understand through expansionary policy but what kind is it buying debt lowering interest rates???

Solution

To reduce unemployment :

THe fedral government could use the expansionary monetary policy.

under this policy the Federal Reserve changes monetary policy by reducing the Federal funds rate. This lowers overall interest rates and compels the businesses to borrow money to buy capital equipment and employ more workers. Low interest rates boost the housing market and spur auto sales and other personal consumption spending.

The second way the Fereral government could reduce unemployment is through expansionary fiscal policy. That\'s when the President and Congress directly create jobs by increasing spending on government projects, as happened in the New Deal and the Economic Stimulus Program.