Assume oil prices rise in the United States,generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand,the Fed could

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The Fed lowering the target money supply growth rate can help control inflation by reducing the amount of money circulating in the economy, which can help dampen price increases, including those initiated by rising oil prices. Other options like decreasing the discount rate, lowering the Fed funds rate, or reducing reserve requirements would actually stimulate the economy, potentially exacerbating inflation. Intervening in currency markets to devalue the dollar could make imports, including oil, more expensive, further increasing inflationary pressures.

Assume Oil Prices Rise in the United States,generating Concerns That