What is the Fed trying to accomplish when they decrease the money supply? a. Reduced unemployment...
What is the Fed trying to accomplish when they decrease the money supply?
| a. |
Reduced unemployment |
|
| b. |
Increase the GDP growth rate |
|
| c. |
Reduce inflation |
|
| d. |
none of the above |
Homework Answers
When Fed system try to accomplish or reach to decrease the money supply it means they adopt for contractionary monetary policy which is done by Federal Open Market Committee.
When there is a decrease in money supply it means the discount rate increases to the commercial bank which causes less investment in the economy and increase in unemployment
If there is a decrease in money supply then GDP growth rate decrease as well as there is a a increase in the inflation
Hence the only correct answer is option A
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