You are worried that the economy is facing a downturn. What actions can you take using the Federal Reserve?

The Federal Reserve (also known as the Fed) is in charge of monetary policy for the United States.  Therefore, if you fear a recession, you can use the Fed to carry out expansionary monetary policy to try to get the economy to grow.  There are, in theory, three actions the Fed could take.

First, the Fed could decrease the required reserve ratio.  If the Fed did this, banks would be able to lend more money. ...

The Federal Reserve (also known as the Fed) is in charge of monetary policy for the United States.  Therefore, if you fear a recession, you can use the Fed to carry out expansionary monetary policy to try to get the economy to grow.  There are, in theory, three actions the Fed could take.

First, the Fed could decrease the required reserve ratio.  If the Fed did this, banks would be able to lend more money.  This would increase economic activity and the economy would grow.  In practice, the Fed rarely does this.

Second, the Fed could lower interest rates.  If the Fed charges lower interest rates when it loans money to banks, the banks will charge lower interest rates when they lend money out.  This will increase lending and the economy will grow. The Fed does this at times, but it cannot really do that right now because interest rates are already very low.

Finally, the Fed could buy government securities in open market operations.  When the Fed does this, it gives banks money in return for government securities.  In essence, it is creating money that did not previously exist.  This is the tool that the Fed uses most often because it can be carried out on a day-to-day basis as circumstances warrant.