1) If the Fed believes that the U.S. economy is overheated and in danger of unacceptably...

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1) If the Fed believes that the U.S. economy is overheated and in danger of unacceptably...

1) If the Fed believes that the U.S. economy is overheated and in danger of unacceptably high rates of price inflation, it will most likely

Select one: A. lower the Federal Reserve discount rate of lending.

B. sell U.S. Treasury securities from its own portfolio.

C. decrease the legal reserve ratio for member banks.

D. buy U.S. Treasury securities from bond dealers.

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Answer 1

Answer #1

Option b . sell U.S. Treasury securities from its own portfolio. is correct option because when inflation is high and US economy is overheated then the fed will try to reduce money supply by selling US treasury securities to reduce money supply.

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