Question 5 suppose that you are a member of the board

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Question 5 Suppose that you are a member of the Board of Governors of the Federal Reserve System. The economy is experiencing a sharp and prolonged inflationary trend. What changes in (a) the reserve ratio, (b) the discount rate, and (c) open-market operations would you recommend? (a) Increase reserve ratio. (b) Increase discount rate. (c) Tighten money supply by selling more government bonds.Explain in each case how the change you advocate would affect (1) commercial bank reserves, (2) the money supply, (3) interest rates, and (4) aggregate demand.(1) Commercial bank reserves will increase since there will be less money in circulation.(2) Money supply should contract/tighten.

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