031125 Monetary Policy Notes

What is the main goal of monetary policy according to the video?

• To increase government spending

• To control inflation rates

• To influence the nation's money supply and impact the business cycle

During an economic downturn, how does the Federal Reserve typically respond?

• The Federal Reserve restricts lending to banks.
• By increasing the money supply and lowering interest rates

• The Federal Reserve increases taxes to boost revenue.

Why might the Federal Reserve want to reduce the money supply during periods of high inflation?

• To increase consumer spending and boost the economy.
• To encourage banks to lend more money to businesses.
• To slow economic growth and reduce inflation