If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?
A)decreasing reserve requirements
B)increasing the discount rate
C)buying government bonds
D)none of the above

Question

If inflation is the major problem in the economy, which of the following would be an appropriate monetary policy response?​
A)​decreasing reserve requirements
B)​increasing the discount rate
C)​buying government bonds
D)​none of the above

Quizplus · Accepted Answer

Increasing the discount rate is an appropriate monetary policy response to combat inflation as it will increase the cost of borrowing and reduce the money supply, thereby reducing consumer and business spending and demand-pull inflation. Decreasing reserve requirements and buying government bonds would increase the money supply, which would exacerbate inflation.

If Inflation Is the Major Problem in the Economy, Which