When the Federal Reserve increases the money supply, at a given price level the amount of output demanded is ______ and the aggregate demand curve shifts ______.
A) greater; inward
B) greater; outward
C) lower; inward
D) lower; outward

Question

Quizplus · Accepted Answer

When the Federal Reserve increases the money supply, it reduces interest rates and encourages borrowing and spending, leading to an increase in aggregate demand. This shift in aggregate demand causes the aggregate demand curve to shift outward. As a result, at a given price level, the amount of output demanded is greater.

When the Federal Reserve Increases the Money Supply, at a Given