If the Federal Reserve's Goal Is to Stabilize Aggregate Demand

question 153

Short Answer

If the Federal Reserve's goal is to stabilize aggregate demand, then in response to an increase in money demand, the Federal Reserve will _____ the money supply.

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Definitions:

Desert Varnish

A dark, glossy coating found on the surface of rocks in arid environments, formed by microbial activities and the deposition of minerals.

Pediment

A gently sloping rock surface found at the base of mountains in arid and semi-arid environments, formed by the erosion of overlying rock and sediment.

Desert Pavement

A landscape surface covered with closely packed, interlocking angular or rounded rock fragments of pebble and cobble size.

Hurricane Sandy

A devastating tropical cyclone that impacted the Caribbean and Eastern United States in October 2012.