Question

What monetary policies should the Federal Reserve enact to combat higher inflation rates for consumer goods and services?(1 point)
Responses

Enact contractionary monetary policies to decrease the money supply.
Enact contractionary monetary policies to decrease the money supply.

Enact expansionary monetary policies to increase the money supply.
Enact expansionary monetary policies to increase the money supply.

Enact contractionary monetary policies to increase money supply.
Enact contractionary monetary policies to increase money supply.

Enact expansionary monetary policies to decrease the money supply.

Answer 1

To combat higher inflation rates for consumer goods and services, the Federal Reserve should:

**Enact contractionary monetary policies to decrease the money supply.**

This policy approach typically involves raising interest rates and reducing the availability of money in the economy, which can help to reduce inflation pressures.