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KiRa [710]
3 years ago
6

When the Fed carries out contractionary monetary policy through selling bonds __________. Select the correct answer below: it re

duces the supply of loanable funds which raises the interest rate it reduces the supply of loanable funds which lowers the interest rate it increases the supply of loanable funds which lowers the interest rate it increases the supply of loanable funds which increases the interest rate
Business
1 answer:
Natalka [10]3 years ago
6 0

Answer: it reduces the supply of loanable funds which raises the interest rate

Explanation: Contractionary monetary policy is a monetary policy that reduces the supply of money and increases interest rates and is carried out by the Fed through selling of bonds. This reduces the supply of loanable funds and increases the interest rate. It is driven by increases in the various base interest rates with a goal to reduce inflation by limiting the amount of active money in circulation.

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