The Fed's actions to fight an inflation shift the
A) aggregate demand curve rightward.
B) aggregate demand curve leftward.
C) long-run aggregate supply curve rightward.
D) long-run aggregate supply curve leftward.

Question

Quizplus · Accepted Answer

The Fed fights inflation by reducing the money supply or raising interest rates, which decreases overall spending and investment. This leads to a leftward shift in the aggregate demand curve, as consumers and businesses reduce spending.

The Fed's Actions to Fight an Inflation Shift the