Answered: Which of the actions can the Federal…

Which of the actions can the Federal Reserve take to reduce inflationary pressures in the United States? A. Increase government spending B. Increase the money supply C. Increase interest rates

Foundations of Business (MindTap Course List)

6th Edition

ISBN:9781337386920

Author:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Publisher:William M. Pride, Robert J. Hughes, Jack R. Kapoor

Chapter1: Exploring The World Of Business And Economics

Section1.5: The Business Cycle

Problem 3CC

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Concept explainers

Monetary Policy

Monetary policy means the process through which a central bank or other financial authorities manage the money supply in an economy. It is an attempt to reduce inflation and contributes to the stable gross domestic product (GDP) to lower unemployment. The monetary authority reduces the interest rate for price stability in a nation’s currency. The central bank of a nation governs monetary policies and controls the overall money supply available to banks and customers.

Question

Which of the actions can the Federal Reserve take to reduce inflationary pressures in the United States?

A. Increase government spending
B. Increase the money supply
C. Increase interest rates

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