Question

What actions would the Federal Reserve take if it were pursuing a tight money policy to curb inflation, and what action would it take if it were pursuing an easy money policy to increase economic growth and reduce unemployment

Answer 1

Tight financial strategy: For seeking after a tight fiscal approach the Fed will build the markdown rate in the market, they will sell securities in the open market that will expand the Federal store rate and they will expand the hold proportion in the economy this will diminish the cash supply in the market and increment the loan cost.

For an expansionary fiscal strategy they will cut the rebate rate, purchase securities in the market, lessen the government finance rate and abatement the save proportion this will expand the cash supply and increment the cash supply in the market.