The Fed can ____________ and the government can ___________ to stimulate aggregate demand in the economy.

Question

Quizplus · Accepted Answer

Lowering interest rates makes it cheaper for people and businesses to borrow money which leads to an increase in spending and investment, thus stimulating aggregate demand. Increasing government spending also directly increases aggregate demand by injecting more money into the economy. Therefore, the best choice is A: lower interest rates and increase government spending.

The Fed Can ____________ and the Government Can ___________ to Stimulate

The Fed Can __ and the Government Can _ to Stimulate