Question

Suppose the fed decreases the money supply. in response households and firms will​ ________ short term assets and this will drive​ ________ interest rates.

Answer 1

In response households and firms will​ sell short term assets and this will drive​ up interest rates.
Price stability, High employment, Economic growth and Stability of financial markets and institutions are the four monetary policy goals of the Fed. Sometimes, the Fed can have trouble to distinguish the small ups and downs of the economy from a recession.