Which action can the Federal Reserve take to pursue a tight-money policy?

a. raise tax rates on all taxpayers to increase revenues

b. decrease the amount of money in the economy

c. regulate trading between banks and customers

d. prevent the government from running a deficit

e. increase the amount of money in the economy

In order to pursue a tight-money policy, the Federal Reserve can " b. decrease the amount of money in the economy ". This is primarily done by selling securities and bonds.

Correct answer choice is:

b. Decrease the amount of money in the economy

Explanation:

A tight monetary policy could be a course of action tackled by the FRS to constrict commercialism in an economy that's seen to be rising too quickly or to restraint inflation once it's going up too quickly. Whereas inflation could be a natural consequence of the economic process, lose financial policies will unnaturally increase inflation. Loose financial policies result from low discount and prime interest rates. The FRS uses tight financial policies to scale back the results of inflation and tighten the economic market.