Asked by Michelle Rebollar on May 18, 2024
Verified
When there is a great deal of inflation the Fed will
A) sell securities on the open market.
B) buy securities on the open market.
C) both sell and buy securities on the open market.
D) not sell nor buy securities on the open market.
Open Market
A market structure characterized by a high degree of competition where buyers and sellers can freely conduct transactions.
Inflation
The speed at which the overall price level of goods and services increases, leading to a decline in buying power.
Securities
Financial instruments that represent either ownership (as in the case of equities) or a debt agreement (as in the case of bonds) with the individual or corporate entity that issues them.
- Understand the role of the Federal Reserve in inflation control and its tools for managing economic fluctuations.
Verified Answer
CR
Christina RollinsMay 22, 2024
Final Answer :
A
Explanation :
When there is a great deal of inflation, the Federal Reserve (Fed) will sell securities on the open market to reduce the money supply, which can help to lower inflation by increasing interest rates.
Learning Objectives
- Understand the role of the Federal Reserve in inflation control and its tools for managing economic fluctuations.