Disinflation occurs when the Fed:
A) raises the growth rate of the money supply.
B) reduces the growth rate of the money supply.
C) sets the money supply growth rate above the inflation rate.
D) does nothing when a shock occurs.

Question

Quizplus · Accepted Answer

Disinflation occurs when the growth rate of the money supply is reduced. This can be done by the Fed through various monetary policy measures, such as increasing interest rates or selling bonds. By reducing the money supply growth rate, there is less money available to spend, which can lead to lower prices and a decrease in inflation.

Disinflation Occurs When the Fed