contestada

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

Respuesta :

Answer:

option A, C and D

Explanation:

In response to high inflation Fed takes different steps like fed start charging bank more interest, they start selling more securities and decrease the money supply.

To compensate for the inflation  Fed sells more securities which the bank has to buy so, the liquidity of the bank decreases as the money of the bank is spent on buying the securities.

Buying securities will decrease the money supply.

Buying and selling the securities helps the government to maintain the rate of growth of the country's money supply to control inflation.

Hence, the correct answer is option A, C, and D

Martebi

The statements that describes how the Fed responds to high inflation are:

  • It charges banks more interest.
  • It sells more securities.
  • It decreases the money supply.

How does the Fed control inflation?

The Federal Reserve is one that is responsible for the control of inflation and they do it by influencing or making some changes in interest rates.

When inflation is said to be too high, the Federal Reserve is known to immediately increases interest rates so as to slow the economy and bring inflation down.

Learn more inflation from

https://brainly.com/question/777738

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