Question

What can the Federal Reserve do to slow economic growth?

Oa) decrease money in the banks
Ob) reduce interest rates
Oc) increase interest rates

Answer 1

The correct answer is:

Oc) Increase interest rates

Step-by-step explanation:

The Federal Reserve can slow economic growth by increasing interest rates. When the Federal Reserve raises interest rates, it becomes more expensive for individuals and businesses to borrow money. Higher interest rates discourage borrowing and spending, which can help slow down economic growth. This can be done to prevent inflation or to cool down an overheating economy. By increasing interest rates, the Federal Reserve aims to reduce overall spending and investment, which can have a dampening effect on economic growth.