According to the AS/AD model, if the economy is in a recession and the Fed wants to increase output and employment, it should:
A)act to increase the money supply.
B)act to decrease the money supply.
C)raise interest rates.
D)raise reserve requirements.

Question

Quizplus · Accepted Answer

Increasing the money supply can lower interest rates, encouraging borrowing and investment, which in turn can increase output and employment, helping to mitigate a recession.

According to the AS/AD Model, If the Economy Is in a Recession