Prices are climbing and demand for goods and services is increasing.Which of the following is the Fed most likely to do?

Question

Quizplus · Accepted Answer

The Fed is likely to increase the discount rate. The discount rate is the interest rate that the Fed charges commercial banks for short-term loans. Increasing the discount rate will make it more expensive for banks to borrow money, which will reduce the amount of money in circulation and slow down economic growth. This will help to reduce demand and inflationary pressures.

Prices Are Climbing and Demand for Goods and Services Is