7. Inflationary pressure is a growing problem for the economy. Therefore, the Fe

Question

7. Inflationary pressure is a growing problem for the economy. Therefore, the Federal Reserve decides to pursue a policy to reduce the inflationary pressure. Which policy changes by the Fed would reinforce each other to achieve that objective? A. Injecting reserves into the financial system and raising the discount rate B. Selling government securities and lowering the discount rate C. Buying government securities and lowering the discount rate D. Buying government securities and lowering the reserve ratio E. Withdrawing reserves from the financial system and raising the discount rate

Explanation / Answer

Withdrawing reserves from the financial system and raising the discount rate

as withdraw of reserves will reduce the money supply which will increase interest cost andon the other side raising rates will further increase interest cost which both decreases the inflation.

Related Questions

Navigate

• Browse (All)
• Browse 7
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.