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:

Acidic

Having properties of an acid, or a pH less than 7, capable of donating a proton (H+) to another compound.

Increasing Basicity

Describes the trend or sequence in which the ability of a substance to act as a base increases.

Increasing

Becoming larger or greater in size, number, value, or amount.

pKa

A quantitative measure that reflects the acid strength of a substance; the lower the pKa value, the stronger the acid.