If the Federal Reserve wants to increase output, it increases
A) G.
B) M/P.
C) i.
D) all of the above.

Name: If the Federal Reserve wants to increase output, it increases A) G. B) M/P. C) i. D) all of the above.
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Question

Quizplus · Accepted Answer

By increasing the money supply (M), the Federal Reserve can lower interest rates (i) and increase aggregate demand, which leads to an increase in output. Increasing government spending (G) can also increase output, but that is the purview of fiscal policy rather than monetary policy.

If the Federal Reserve Wants to Increase Output, It Increases