The Fed increases the quantity of money to counteract
A)a recessionary gap.
B)a federal budget surplus.
C)negative net exports.
D)an inflationary gap.
E)inflation.

Name: The Fed increases the quantity of money to counteract A)a recessionary gap. B)a federal budget surplus. C)negative net exports. D)an inflationary gap. E)inflation.
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Question

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The Fed increases the quantity of money to stimulate economic activity and counteract a recessionary gap, which occurs when actual GDP is less than potential GDP.

The Fed Increases the Quantity of Money to Counteract