If the economy is in an inflationary boom, the Fed would most likely
A) increase bank reserves by raising the discount rate.
B) increase bank reserves by buying government securities
C) decrease bank reserves by lowering the discount rate.
D) decrease bank reserves by selling government securities.
E) decrease bank reserves by lowering the legal reserve requirement.

Question

Quizplus · Accepted Answer

If the economy is in an inflationary boom, the Fed would most likely decrease bank reserves by selling government securities. This would decrease the amount of money in circulation and thereby reduce inflation.

If the Economy Is in an Inflationary Boom, the Fed