The Fed's Policies under Volcker In the years 1979 to 1982, under the leadership of Paul Volcker, the Fed adopted a tight money policy to reduce the nation's inflation rate. First, a quick review: when the Fed follows a tight money policy, does the Fed tend to increase the nation's money supply, or does it reduce the money supply? Choose one answer below: O In a tight money policy, the Fed reduces the money supply. O In a tight money policy, the Fed increases the money supply.
