When inflation grows, the Federal Reserve typically will
A. authorize the printing of currency.
B. increase interest rates.
C. lend more money.
D. increase taxes.
Answer (2)
The Federal Reserve typically responds to growing inflation by increasing interest rates to control excessive spending and stabilize the economy. This action is fundamental in managing inflation effectively. Other options like printing currency or lending more money are generally not the approach taken during inflationary periods. ;
The Federal Reserve typically responds to growing inflation by increasing interest rates to manage inflation and stabilize the economy. Higher interest rates reduce borrowing and spending, which helps to lower inflation. Thus, the correct answer is option B: increase interest rates.
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