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If the Federal Reserve ( Fed ) cannot reduce inflation sufficiently using the tools it has deployed thus far in it's tightening process, it has
If the Federal Reserve Fed cannot reduce inflation sufficiently using the tools it has deployed thus far in it's tightening process, it has a major tool available to drastically tighten credit conditions. Which of the following best describes this Monetary Policy tool?
A Buying US Treasuries and Mortgage Backed Securities which would increase the Fed's balance sheet, and have the effect of removing USD's from the financial system and decreasing the money supply and make credit more costly
B Selling US Treasuries and Mortgage Backed Securities which would decrease the Fed's balance sheet, and have the effect of removing USD's from the financial system and decreasing the money supply and make credit more costly
C Lowering the Federal Funds Rate and allowing assets on the Fed's balance sheet such as US Treasuries and Mortgage Backed Securities to mature without replacement. This would have the effect of tightening credit conditions.
D Increasing the Federal Funds Rate and allowing assets on the Fed's balance sheet such as US Treasuries and Mortgage Backed Securities to mature without replacement. This would have the effect of tightening credit conditions.
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