Outline the policy choices for contractionary and expansionary options of the Fed

In the case of persistent, high inflation, the Fed would pursue a contractionary policy. To decrease the money supply it would sell bonds, raise the discount rate, raise the reserve requirement, and increase the interest rate paid on reserves. If the Fed wanted to pursue an expansionary policy because of a severe recession, it would increase the money supply by buying bonds, lowering the reserve requirements, lowering the discount rate, and lowering the interest rate paid on reserves.