Exhibit 15-6
-If the Federal Reserve is targeting the money supply when the demand for money decreases,their proper response is to
A)decrease the money supply
B)keep the money supply on a path of constant,predictable growth
C)increase the money supply to match the increase in the demand for money
D)stimulate inflation to increase the demand for money
E)stimulate a decrease in the price level to increase the demand for money

Question

Exhibit 15-6 
-If the Federal Reserve is targeting the money supply when the demand for money decreases,their proper response is to
A)decrease the money supply 
B)keep the money supply on a path of constant,predictable growth 
C)increase the money supply to match the increase in the demand for money 
D)stimulate inflation to increase the demand for money 
E)stimulate a decrease in the price level to increase the demand for money

Quizplus · Accepted Answer

When targeting the money supply, the Federal Reserve aims to maintain a stable and predictable growth path for the money supply, regardless of short-term fluctuations in money demand.

Exhibit 15-6 -If the Federal Reserve Is Targeting the Money Supply When