When the economy is expanding too quickly and the Federal Reserve (Fed) wants to control future growth in the economy, the Fed will:

Question

Quizplus · Accepted Answer

When the economy is expanding too quickly, there is a risk of inflation. To control future growth and prevent inflation, the Fed will implement contractionary monetary policy by decreasing the money supply. This can be done through actions such as increasing interest rates or selling securities to banks, which reduces the amount of money available for lending and decreases the rate of economic expansion.

When the Economy Is Expanding Too Quickly and the Federal