In a recession, the Fed's monetary policy aims to _{--------------------}the real interest rate, _{--------------------} aggregate demand, and aggregate supply. A)decrease; increase; increase B)decrease; increase; not change C)increase; decrease; not change. D)increase; not change; increase E)increase; increase; increase

Question

Quizplus · Accepted Answer

In a recession, the Fed typically decreases the real interest rate to encourage borrowing and spending, which increases aggregate demand. Aggregate supply is not directly affected by monetary policy in the short term.

In a Recession, the Fed's Monetary Policy Aims to --------------------the

In a Recession, the Fed's Monetary Policy Aims to _{--------------------}the