How does the Fed control inflation?

O passive monetary policy

O restrictive monetary policy

O accommodative or liberal monetary policy.

O increase the supply of funds.

What is the impact of money supply growth?

O increases supply and causes interest rates to rise

O decreases supply and forces interest rates to fall.

O decreases supply and forces interest rates to rise

5 increases in supply and forces interest rates to fall.

If investors leave the US, ceteris paribus, the Fed should:

A

try to keep rates from dropping

O try to decrease borrowing costs

O lower the risk free rate

O reduce risk premium for stocks