Inflationary pressure is a growing problem for the economy. Therefore, the Federal Reserve decides to pursue a policy to reduce the inflationary pressure. Which policy changes by the Fed would tend to offset each other in trying to achieve that objective?

Question

Quizplus · Accepted Answer

Selling government securities is a contractionary policy to reduce inflation, while lowering the discount rate is an expansionary policy, which would offset the contractionary effect.

Inflationary Pressure Is a Growing Problem for the Economy