Is the Federal Reserve more effective at fighting an inflation than a recession?

Question

explain pls

Answer 1

Of course, the fed has tools to fight both.  But there's an old saying about this in the economics profession...."you can pull on a string but you can't push on it".  This is another way of saying that high interest rates can definitely slow the economy, but low interest rates don't necessarily stimulate the economy.  Example:  interest rates set by the fed, as well as market rates, were at historic lows during the Great Depression, but this did very little to help the economy. Why? There was a complete failure in both business and consumer confidence. This was the so-called "liquidity trap" identified by John Maynard Keynes.  People only felt comfortable and safe with cash, and they were not spending because they feared not being able to continue earning more. Low interest rates were essentially meaningless.  It took government spending, essentially a world war, to bring the Depression fully to an end in the 40s.