If the Fed Decreases the Money Supply

question 184

Multiple Choice

If the Fed decreases the money supply,

• A) aggregate demand and aggregate supply both increase.
• B) aggregate demand increases, which leads to movement along the short-run aggregate supply curve.
• C) aggregate demand decreases, which leads to movement along the short-run aggregate supply curve.
• D) aggregate supply increases, which leads to movement along the aggregate demand curve.
• E) aggregate supply decreases, which leads to movement along the aggregate demand curve.

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Definitions:

Logic

Logic is the study of proper reasoning, especially in regard to its structure, validity, and the systematic methods for deducing truth.

Oral Rehydration Therapy

A simple, cost-effective treatment used to prevent dehydration due to diarrhea, involving the oral ingestion of a solution of salts and sugars.

Dehydration

A condition resulting from the excessive loss of water from the body.

Plasticity

The tendency of new parts of the brain to take up the functions of injured parts.