When the Fed believes that inflation is a problem, it will use _____ policy to decrease the money supply and raise interest rates.
A) inflation policy
B) contractionary policy
C) deflation policy
D) recession policy

Question

Quizplus · Accepted Answer

The correct term for the Fed's actions to combat inflation is contractionary policy, which involves decreasing the money supply and raising interest rates to slow down economic growth and reduce inflationary pressures.

When the Fed Believes That Inflation Is a Problem, It