Federal Reserve actions that increase nominal interest rates and decrease the money supply:
A)close a recessionary gap.
B)close an expansionary gap.
C)raise the rate of inflation.
D)raise bond prices.

Question

Quizplus · Accepted Answer

To close an expansionary gap, the Federal Reserve slows the economy. It does this by increasing nominal interest rates through a decrease in the money supply.

Federal Reserve Actions That Increase Nominal Interest Rates and Decrease