Which statements describe how the Fed responds to high inflation? Check all that apply. It charges banks more interest. It pays banks less interest. It sells more securities. It decreases the money supply. It increases the money supply.

Question

Mario Benitez

History

11 August, 12:22

Which statements describe how the Fed responds to high inflation? Check all that apply. It charges banks more interest. It pays banks less interest. It sells more securities. It decreases the money supply. It increases the money supply.

+1

Answers (1)

Know the Answer?

Amber Pittman · Answer 1

The statements are:

- It charges banks more interest

- It decreases the money supply.

To control inflation, the Feds will always try to reduce the amount of money that circulates in the market.

Charging more interest will make people much less likely to borrow, which reduce the money circulation in the market.

Decreasing money supply will directly reduce the money circulation in the market.