If the Fed's policies aim to increase aggregate demand, the Fed must fear
A)a supply shock that decreases potential GDP.
B)stagflation.
C)recession.
D)a supply shock that increases aggregate supply.
E)inflation.

Question

Quizplus · Accepted Answer

The Fed aims to increase aggregate demand typically when it fears a recession, which is characterized by reduced economic activity and high unemployment.

If the Fed's Policies Aim to Increase Aggregate Demand, the Fed