If the Fed wishes to slow economic activity, it might actively pursue:
A) expansionary fiscal policy.
B) expansionary monetary policy.
C) contractionary fiscal policy.
D) contractionary monetary policy.

Question

Quizplus · Accepted Answer

The Fed would pursue contractionary monetary policy to slow economic activity. This would involve raising interest rates and reducing the money supply in order to decrease spending and investment, which would put a damper on economic growth.

If the Fed Wishes to Slow Economic Activity, It Might