The correct answer is D) decreased saving and increased spending.
The other options of the question were A) increased saving and spending. B) decreased saving and spending. C) increased saving and reduced spending.
The consumer behavior that the Federal Reserve Board is trying to encourage when it implements a loose monetary policy is "decreased saving and increased spending."
The Federal Reserve, commonly known as the Fed, is the equivalent of a Central Bank in the United States. The Fed has many important functions. One of the main functions is to establish a monetary policy in the country to keep a healthy financial system and proper economic conditions. When the Fed implements a loose monetary policy it tries to decreased saving so people have more cash to spend and increase the purchasing of goods and services.
