If the Federal Reserve wanted to pursue a contractionary monetary policy, it could
A) raise the discount rate.
B) buy U.S. government bonds.
C) decrease the reserve requirement.
D) raise credit card interest rates.

Question

Quizplus · Accepted Answer

Raising the discount rate makes it more expensive for banks to borrow money from the Federal Reserve, which can lead to a decrease in the money supply, aligning with the goals of a contractionary monetary policy.

If the Federal Reserve Wanted to Pursue a Contractionary Monetary