If the Fed is strongly committed to fighting inflation, it will be reluctant to:
A) focus solely on price stabilization.
B) become too independent from Congress.
C) increase the money supply.
D) increase unemployment.

Question

Quizplus · Accepted Answer

Increasing the money supply is one of the main ways the Fed can stimulate economic growth, but it can also lead to inflation. Therefore, if the Fed is committed to fighting inflation, it will be reluctant to increase the money supply. Focusing solely on price stabilization (A) and becoming too independent from Congress (B) are not necessarily actions that would undermine the Fed's commitment to fighting inflation. Increasing unemployment (D) is not always a deliberate action on the part of the Fed, and may not necessarily be related to its inflation-fighting efforts.

If the Fed Is Strongly Committed to Fighting Inflation, It