If inflation is a threat, the Fed is likely to engage in a contractionary monetary policy.

Name: If inflation is a threat, the Fed is likely to engage in a contractionary monetary policy.
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Quizplus · Accepted Answer

If inflation is a threat, the Fed tries to slow down the economy to decrease the demand for goods and services. They do so by raising interest rates, which encourages people to save more and spend less. This is an example of a contractionary monetary policy.

If Inflation Is a Threat, the Fed Is Likely to Engage