During a Period of Inflation, the Fed Is Likely To

question 154

Multiple Choice

During a period of inflation, the Fed is likely to:

• A) sell government securities to banks in order to reduce the amount of loanable funds.
• B) buy government securities from banks in order to reduce the amount of loanable funds.
• C) raise taxes in order to reduce the money supply.
• D) cut the required reserve ratio in order to reduce the amount of excess reserves banks have to loan out.
• E) cut the discount rate in order to increase the affordability of loanable funds.

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