ECONOMICS
FISCAL POLICY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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if the FED wants to correct inflation, they can
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buy bonds
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lower the discount rate
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lower the reserve requirement
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all of these
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none of these
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Explanation:
Detailed explanation-1: -When inflation is too high, the Federal Reserve typically raises interest rates to slow the economy and bring inflation down. When inflation is too low, the Federal Reserve typically lowers interest rates to stimulate the economy and move inflation higher.
Detailed explanation-2: -Generally, if the inflation rate is too high, the Federal Reserve will want to raise the federal funds rate. puts upward pressure on prices. the Fed can react more quickly than the legislature can.
Detailed explanation-3: -The Fed can directly lower the inflation rate. The Fed can simultaneously reduce the inflation rate and stimulate growth through lowering interest rates.
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