Question
When would the Federal Reserve want to use contractionary monetary policy?
Group of answer choices
To fight inflation
To balance the federal budget
To move the U.S. economy out of a recessio
Group of answer choices
To fight inflation
To balance the federal budget
To move the U.S. economy out of a recessio
Answers
GPT-4o mini
The Federal Reserve would want to use contractionary monetary policy primarily **to fight inflation**. Contractionary monetary policy involves decreasing the money supply and increasing interest rates, which can help reduce spending and investment, thereby slowing down inflationary pressures in the economy.
The other options, such as balancing the federal budget or moving the economy out of a recession, would typically not be associated with contractionary policy. Rather, expansionary monetary policy would be used to stimulate economic growth during a recession.
The other options, such as balancing the federal budget or moving the economy out of a recession, would typically not be associated with contractionary policy. Rather, expansionary monetary policy would be used to stimulate economic growth during a recession.