-In the above figure, the economy experiences a decrease in aggregate demand so that the aggregate demand curve shifts from AD? to AD?. If the Fed wants to offset this change, it would ________.

Question

Quizplus · Accepted Answer

To offset a decrease in aggregate demand, the Federal Reserve (Fed) would aim to increase the money supply and stimulate economic activity. Purchasing government securities on the open market is a monetary policy tool that increases the money supply, encouraging spending and investment, which can help counteract the decrease in aggregate demand.

-In the Above Figure, the Economy Experiences a Decrease in Aggregate