-In the above figure, the economy experiences an increase in aggregate demand so that the aggregate demand curve shifts from AD₀to AD₂. If the Fed wants to offset this change, it would
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Question

-In the above figure, the economy experiences an increase in aggregate demand so that the aggregate demand curve shifts from AD₀to AD₂. If the Fed wants to offset this change, it would )

Quizplus · Accepted Answer

Selling government securities on the open market would decrease the money supply, leading to higher interest rates, which would offset the increase in aggregate demand by reducing consumption and investment.

-In the Above Figure, the Economy Experiences an Increase in Aggregate