Question

Which would be the appropriate monetary policy and goal during a period of high inflation? A) Increase interest rates in order to increase the money supply. B) Decrease interest rates in order to decrease the money supply. C) Increase interest rates in order to decrease the money supply. D) Decrease interest rates in order to increase the money supply.

Answer 1

c

Step-by-step explanation:

Answer 2

C) Increase interest rates in order to decrease the money supply

During high inflation, the Federal Reserve will increase rates so that it is harder to borrow money and people will not spend as much of what they already have. The goal of this is to slow down economic growth (which is tied to inflation) in the short term.