If the Fed Seeks to Constrain Inflation,it Would Be Most

question 168

Multiple Choice

If the Fed seeks to constrain inflation,it would be most likely to

• A)sell government bonds to banks in order to reduce the amount of loanable funds.
• B)buy government bonds 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.

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Definitions:

Mass Unemployment

A significant and widespread condition in which a large percentage of the eligible workforce is unable to find employment.

Deflation

An economic condition characterized by a decrease in the price levels of goods and services.

Investment

The action or process of allocating resources, usually money, with the expectation of generating an income or profit.