When the government raises spending to promote economic growth, the Fed sells government bonds on the open market.This implies that the Federal Reserve and the federal government are following different policy goals.

Question

Quizplus · Accepted Answer

The federal government's goal when raising spending is to promote economic growth, while the Fed's goal when selling government bonds on the open market is to decrease the money supply in order to combat inflation. Therefore, they are following different policy goals.

When the Government Raises Spending to Promote Economic Growth, the Fed