Which of the following was a consequence of the Federal Reserve Board's 1981 decision to tighten the money supply?
A) The inflation rate increased.
B) Interest rates began a slow but steady decline.
C) Economic activity declined and the unemployment rate increased.
D) Federal budget deficits were brought under control.

Question

Quizplus · Accepted Answer

Tightening the money supply reduces the amount of credit available and makes borrowing more expensive. This leads to a decrease in economic activity and an increase in unemployment, as businesses and consumers have less access to credit and therefore spend less.

Which of the Following Was a Consequence of the Federal