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.

Inflation is when there is a persistent rise in the general price level. When there is an inflation, the Fed would take steps to reduce the level of inflation. This can be achieved by using contractionary monetary policies to reduce money supply.

Contractionary monetary policies include:

increasing the reserve requirement
having an open market sale

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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.

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How would the Fed respond when there is a high inflation?

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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.