39. What can the Federal Open Market Committee do to increase the money supply? Answers A. buy government securities B. sell government securities C. raise the discount rate D. lower reserve requirements Question40. What is likely to be the best approach to a recession that is expected to turn into an expansion in a short time? Answers A. Use monetary policy to lower interest. B. Do nothing and let the economy fix itself. C. Use fiscal policy to lower interest. D. Use monetary policy to raise interest. Question41. Why do low interest rates encourage business investment? Answers A. It is cheaper to borrow money when interest rates are low. B. Inflation is lower when interest rates are low. C. Lower interest rates cause the money supply to expand. D. Lower interest rates cause the money supply to decrease. Question42. Why is the Federal Reserve called a "lender of last resort?" Answers A. The Fed decides to whom a bank can lend money. B. The Fed will make loans to businesses and individuals when other banks will not. C. The Fed can decide how much money a bank can loan out. D. The Fed makes loans that allow banks to maintain required reserves