During inflationary periods, the Federal Reserve can be expected to
A) try to lower interest rates.
B) try to raise interest rates.
C) try lend more reserves to banks.
D) try to lower the required reserve ratio.

Question

Quizplus · Accepted Answer

During inflationary periods, the Federal Reserve may raise interest rates in order to decrease spending and slow down the economy. This is because higher interest rates make borrowing more expensive, reducing the amount of money people and businesses can spend.

During Inflationary Periods, the Federal Reserve Can Be Expected to