If the Fed wished to decrease inflation, it could
A) increase the reserve requirement or conduct an open market sale.
B) increase the reserve requirement or conduct an open market purchase.
C) decrease the reserve requirement or conduct an open market sale.
D) decrease the reserve requirement or conduct an open market purchase.

Question

Quizplus · Accepted Answer

To decrease inflation, the Fed can increase the reserve requirement, which reduces the amount of money banks can lend out, or conduct an open market sale, which reduces the money supply by selling government securities, both of which can help lower inflation.

If the Fed Wished to Decrease Inflation, It Could