Which of the following statements lists contractionary policies?
A) The Fed sells bonds,lowers the discount rate,and raises the reserve requirements.
B) The Fed sells bonds,lowers the discount rate,and lowers the reserve requirements.
C) The Fed purchases bonds,lowers the discount rate,and lowers the reserve requirements.
D) The Fed sells bonds,raises the discount rate,and raises the reserve requirements.

Question

Quizplus · Accepted Answer

Contractionary policies are policies aimed at decreasing the money supply and slowing down economic growth. The Fed selling bonds, raising the discount rate, and raising the reserve requirements are all contractionary policies. Choice A includes lowering the reserve requirements, which would actually increase the money supply and is an expansionary policy. Choice B includes lowering both the discount rate and reserve requirements, both of which are expansionary policies. Choice C includes purchasing bonds and lowering both the discount rate and reserve requirements, which are all expansionary policies.

Which of the Following Statements Lists Contractionary Policies