Suppose the Economy Is at Full Employment with a High

Multiple Choice

Suppose the economy is at full employment with a high inflation rate. Which combination of government policies is most likely to reduce the inflation rate?

A) buy government securities in the open market, do bond reverse-repos, and increase taxes
B) buy government securities in the open market, do bond repos, and decrease taxes
C) sell government securities in the open market, do bond repos, and increase government spending
D) sell government securities in the open market, do bond reverse-repos, and cut government spending