-In the above figure, the economy experiences an increase in aggregate demand so that the aggregate demand curve shifts from AD₀ to AD₂. If the Fed wants to offset this change, it would

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Quizplus · Accepted Answer

To offset an increase in aggregate demand, the Federal Reserve (Fed) would aim to decrease the money supply and increase interest rates to dampen spending and investment. Selling government securities on the open market is a tool used to achieve this by taking cash out of circulation, which aligns with option B.

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