SIE - Securities Industry Essentials Exam
If inflation has been increasing at an increasing rate, which of the following actions might the Federal Reserve Board take?
Increasing interest ratesA
Decreasing interest ratesB
Lowering bank reserve requirementsC
Increasing the money supplyD
To curb inflation, the FED could increase interest rates. This can reduce the rate of spending since there is less money to go around and therefore can reduce spending and slow inflation. The other 3 answers may create more inflation.