Answer:
Increase interest rates in order to decrease the money supply
Explanation:
During high inflation, the Federal Reserve will increase rates so that it is harder to borrow money and people will not spend as much of what they already have. The goal of this is to slow down economic growth (which is tied to inflation) in the short term.
The appropriate monetary policy during a period of inflation would be to reduce the interest rate in order to increase spending.
Inflation in an economy is a period where there is a high increase in the prices of goods and services in the economy and also there is a fall in the value of money in the economy.
When the interest rate is lowered, this would discourage saving in the economy. More people would spend money instead of saving it with the hope of earning more on interests.
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