Answered

The Federal Reserve would most likely adopt a contractionary monetary policy in which economic situation?

A. The country has a high inflation rate and rapid economic growth.
B. The country has a high unemployment rate and slow economic growth.
C. The country has a low unemployment rate and steady economic growth.
D. The country has a low inflation rate and weak economic growth.



Answer :

GinnyAnswer

Final answer:

The Federal Reserve implements a contractionary monetary policy to address high inflation and weak economic growth by selling bonds to reduce the money supply and raise interest rates.


Explanation:

The Federal Reserve would most likely adopt a contractionary monetary policy in an economic situation where:

  1. The country has a high inflation rate and rapid economic growth. This is because high inflation is a concern that can be addressed through a contractionary monetary policy.
  2. The country has a low inflation rate and weak economic growth. This is because a contractionary policy can help stimulate economic growth by controlling inflation.

Contractionary monetary policy involves actions such as selling bonds to reduce the money supply and raise interest rates to curb inflation.


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