To correct high inflation, the Fed implements a _ monetary policy, and ___ treasury securities in...

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Question

To correct high inflation, the Fed implements a _ monetary policy, and ___ treasury securities in...

To correct high inflation, the Fed implements a _______ monetary policy, and _________ treasury securities in the open market.

A. loose, sell

B. loose, purchases

C. tight, purchases

D. tight, sells

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Answer 1

Answer #1

Answer is D. Tight; Sells

Explanation:

When there is high inflation in the economy, the federal bank needs the squeeze the money supply from the economy. This can be done through selling the securities so that moeny will flow from public to government and also the tight policies are initiated such as increase in bank rates, etc.

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Answer 2

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