News reports indicate that the Fed plans to announce its third increase in the discount rate in the past five months. Additional reports suggest that the Fed may also increase the reserve requirement in the near future. Apparently the Fed perceives the number one problem facing the economy is

Question

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Raising the discount rate and the reserve requirement are policies that would restrict the money supply. The Fed is most likely to pursue these policies when it is trying to control inflationary pressures in the economy.

News Reports Indicate That the Fed Plans to Announce Its