To close an inflationary gap using monetary policy, the Federal Reserve should _____ the money supply to _____ investment and consumer spending and shift the aggregate demand curve to the _____.
A) increase; increase; left
B) decrease; decrease; left
C) increase; increase; right
D) decrease; decrease; right

Question

Quizplus · Accepted Answer

To close an inflationary gap, the money supply needs to be decreased to reduce investment and consumer spending. This shift in the money supply will shift the aggregate demand curve to the left.

To Close an Inflationary Gap Using Monetary Policy, the Federal