If inflation is the major problem in an economy, which of the following would be an appropriate monetary policy response?

Question

Quizplus · Accepted Answer

Increasing the discount rate would discourage borrowing and reduce the money supply, which would help to decrease the inflation rate. Decreasing reserve requirements or buying government bonds would increase the money supply and potentially exacerbate the inflation problem. Providing more cash transfers or decreasing the volume of cash transfers would have little to no effect on inflation.

If Inflation Is the Major Problem in an Economy, Which