Question

Assume oil prices rise in the United States, generating concerns that inflation may increase. If the Fed wishes to ensure that inflation does not get out of hand, the Fed could Multiple Choice intervene in the currency markets to push the value of the dollar down. decrease the discount rate. lower the target Fed funds rate. lower the target money supply growth rate. reduce reserve requirements at banks.

Answer 1

If the Fed wishes to ensure that inflation does not get out of hand, the Fed could lower the target money supply growth rate.

Inflation is when the general price levels in an economy increases persistently overtime.  The policy tools that the Fed can use to control general price levels in the economy is known as monetary policy.

There are two types of monetary policy :

1. Expansionary monetary policy : these are steps taken by the Fed to increase the supply of money in the economy. These steps include reducing the target Funds rate, decreasing the reserve requirements and carrying out open market purchase.
2. Contractionary monetary policy : these are steps taken to reduce the money supply in the economy. These steps include reducing the target money supply growth rate and carrying out an open market sales.

To learn more about monetary policy, please check: brainly.com/question/15566475?referrer=searchResults