During a Period of Inflation, the Fed Is Likely To

question 62

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) cut the discount rate to increase the affordability of loanable funds.
• D) cut the required reserve ratio in order to reduce the amount of excess reserves banks have to loan out.