The Fed may engage in ____ if the economy faces an inflationary gap.

Name: The Fed may engage in ____ if the economy faces an inflationary gap.
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Inflationary gap occurs when the economy is experiencing high inflation rates and the supply of goods and services is not meeting the demand. If inflationary gap persists, the Fed may implement contractionary monetary policy to reduce the money supply, increase the interest rates, and slow down the economic growth to control inflation.

The Fed May Engage in ____ If the Economy Faces