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AP® Macroeconomics

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Federal Reserve and Consumer Activity

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Suppose a new fear of imminent bank failures pervaded the American economy due to a looming recession and negative economic data. Also, suppose this caused large numbers of private citizens to withdraw funds from banks.

The most likely Fed action would be to

A

sell bonds.

B

buy bonds.

C

increase Reserve Requirements.

D

de-activate the FDIC.

E

limit foreign investment in the US.