Question

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

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

Enact contractionary monetary policies to increase 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 approach typically involves raising interest rates and reducing the amount of money circulating in the economy, which can help to lower inflation by reducing consumer spending and borrowing.