If There Is a Leftward Shift of the Money Demand

question 124

Multiple Choice

If there is a leftward shift of the money demand curve,which of the following should the Fed do if it wants to keep the price level stable?

• A) Lower its interest rate target
• B) Sell bonds in the open market
• C) Wait,since the price level does not usually change when the money demand curve shifts
• D) Raise its interest rate target
• E) Buy bonds in the open market.

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