Which action is the Federal Reserve MOST likely to take to curb inflation?
A) lower the discount rate
B) lower reserve requirements
C) raise taxes
D) sell securities in the open market

Question

Quizplus · Accepted Answer

The Federal Reserve will sell securities in the open market to decrease the amount of money available for lending, thereby increasing interest rates and decreasing spending, ultimately slowing down inflation. Lowering the discount rate or reserve requirements would have the opposite effect, increasing the amount of money available for lending and likely increasing inflation. Raising taxes is a fiscal policy option that can also help curb inflation, but it is not within the Federal Reserve's jurisdiction.

Which Action Is the Federal Reserve MOST Likely to Take