If the stock market booms,then
A)aggregate demand increases,which the Fed could offset by increasing the money supply.
B)aggregate supply increases,which the Fed could offset by increasing the money supply.
C)aggregate demand increases,which the Fed could offset by decreasing the money supply.
D)aggregate supply increases,which the Fed could offset by decreasing the money supply.

Question

Quizplus · Accepted Answer

A stock market boom increases wealth, leading to higher consumer spending and thus increasing aggregate demand. The Fed could offset this by decreasing the money supply to prevent overheating of the economy.

If the Stock Market Booms,then