If the Federal Reserve Board wants to increase total demand in the economy, it decreases the money supply and raises interest rates.

Question

Quizplus · Accepted Answer

If the Federal Reserve Board wants to increase total demand in the economy, it typically increases the money supply and lowers interest rates. This makes borrowing cheaper and encourages consumers and businesses to increase their spending, which can stimulate economic growth. Decreasing the money supply and raising interest rates would actually decrease demand and slow down economic activity.

If the Federal Reserve Board Wants to Increase Total Demand