Question

If the Fed wants to increase equilibrium income, it should _____ the supply of money, which will _____ interest rates. The change in interest rates will _____ consumption and investment, causing aggregate demand to _____.

Answer 1

안녕 하세요 있다 보니 너무 많이 와서 같이 하고 있다 보니 너무 많이 받으세요 수 있는 것이 기회를 주셔서

Answer 2

The correct answer is: increase; decrease; increase; rise.

Step-by-step explanation:

If the Federal reserve system wants to increase the equilibrium income it should increase the money supply. This increase in money will increase the availability of money in the money market.

This will cause the supply curve to shift to the right. This rightward shift in the supply curve will cause the interest rate to decline.

As the interest rate decreases, the cost of borrowing declines. So it becomes cheaper to borrow funds. This causes consumption and investment to increase. As a result, aggregate demand increases.