If the Fed thinks inflation is too high, it will
A)lower the target inflation rate and lower interest rates.
B)lower the target inflation rate and raise interest rates.
C)lower the target inflation rate and leave interest rates unchanged.
D)raise the target inflation rate and raise interest rates.
E)raise the target inflation rate and lower interest rates.

Question

Quizplus · Accepted Answer

If the Fed thinks inflation is too high, they will want to slow down spending and investment, which they can do by raising interest rates. Lowering the target inflation rate alone may not be enough to achieve this goal.

If the Fed Thinks Inflation Is Too High, It Will