An important reason why the Federal Reserve would not want to keep interest rates at 0% forever is that: a) it restricts the money supply, making it harder for banks to lend money. b) it limits the ability of the Fed to use expansionary monetary policy when the next recession occurs. c) it makes borrowing for homes and major purchases more expensive. d) it raises the possibility of higher unemployment because lower interest rates slow economic growth.

Respuesta :

An important reason why the Federal Reserve would not want to keep interest rates at 0% forever is that  it limits the ability of the Fed to use expansionary monetary policy when the next recession occurs.

A macroeconomic monetary strategy known as an expansionary monetary policy seeks to speed up the rate of monetary expansion in order to promote the expansion of a domestic economy. More money must be available to promote economic growth. The influx of cash encourages company capital expenditures as well as consumer consumption.

The United States of America's central banking system is called the Federal Reserve System. In the Federal Reserve Act, Congress outlined three main goals for monetary policy: increasing employment, maintaining price stability, and lowering long-term interest rates. After dividends on member banks' capital investments are paid and an account surplus is maintained, the federal government gets all of the system's yearly revenues.

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