If Money Demand Falls on Its Own (I

question 136

Multiple Choice

If money demand falls on its own (i.e. ,not in response to a spending shock) ,what must the Fed do to stabilize GDP?

• A) Increase the money supply
• B) Decrease the money supply
• C) Leave the money supply and money demand unchanged
• D) Increase money demand
• E) Decrease money demand.

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