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

Question

Responses

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

Enact expansionary monetary policies to decrease the 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 can be achieved by increasing interest rates and selling government securities, which can help reduce spending and borrowing, ultimately leading to a decrease in inflation. Therefore, the correct response is:

Enact contractionary monetary policies to decrease the money supply.