Question

The country has entered a period of economic growth, but prices are rising too rapidly. To stabilize prices, the Federal Reserve decides to

decrease the federal funds rate
decrease the reserve requirement
raise the discount rate
buy more government securities

Answer 1

Raise the discount rate.

Explanation:

The country has entered a period of economic growth, but prices are rising too rapidly. To stabilize prices, the Federal Reserve decides to - Raise the discount rate.

Economic growth is defined as a period when the goods and services produced per head of the population over a period of time increases.

So, when the prices are rising the government increases the discount rate to stabilize that price hike.

Answer 2

Correct answer is option c.

Explanation:

In economics growth period, when pricing are rising too rapidly, in order to stabilize prices, Federal Reserve should raise the discount rates.