If the Federal Reserve Authorities Were Attempting to Reduce Demand-Pull

question 365

Multiple Choice

If the Federal Reserve authorities were attempting to reduce demand-pull inflation, the proper policies would be to

• A) sell government securities, raise reserve requirements, raise the discount rate, and increase the interest paid on reserves held at the Fed banks.
• B) buy government securities, raise reserve requirements, raise the discount rate, and reduce the amount of interest paid on reserves held at the Fed banks.
• C) sell government securities, lower reserve requirements, lower the discount rate, and increase the interest paid on reserves held at the Fed banks.
• D) sell government securities, raise reserve requirements, lower the discount rate, and increase the interest paid on reserves held at the Fed banks.

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Definitions:

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