The fed fights inflation by raising interest rates. a. decreasing the monetary base, which raises the interest rate and increases saving.
In finance and economics, interest is the payment by the borrower or deposit-taking financial institution to the lender or depositor of an amount in excess of the repayment of the principal (that is, the amount borrowed) at a specified rate. [1] It is different from a fee that a borrower can pay to a lender or a third party. It also differs from a dividend that a corporation pays to its shareholders (owners) out of its profits or reserves, but rather than at a certain pre-determined rate, the amount of compensation the entrepreneur receives when the profit is generated. It will be prorated as part of the total cost exceeded.
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