If the government wanted to reduce interest rates without changing output,it should
A)increase consumption and reduce the money supply.
B)increase the money supply and raise government spending.
C)increase the money supply and raise taxes.
D)both b and C

Question

Quizplus · Accepted Answer

Increasing the money supply tends to lower interest rates by providing more liquidity. Raising taxes can reduce consumption, potentially offsetting the inflationary effect of a higher money supply without changing output significantly. Choices A and B could change output by affecting aggregate demand directly.

If the Government Wanted to Reduce Interest Rates Without Changing