Suppose the Federal Reserve decides to decrease the money supply in or – InterviewSolution

1.	Suppose the Federal Reserve decides to decrease the money supply in order to lower inflation. In three or four sentences, explain if this is an expansionary or contractionary policy. plz help meeeeee!!!
Answer» In open operations, the Fed BUYS and SELLS GOVERNMENT securities in the open market. If the Fed WANTS to increase the money supply, it buys government bonds. ... Conversely, if the Fed wants to decrease the money supply, it sells bonds from its account, thus taking in cash and removing money from the economic system.Hope it's helps..

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