Final answer:
To decrease aggregate demand, a government can apply a tight monetary policy by B) increasing interest rates, which reduces imports by appreciating the domestic currency thereby lowering net exports and aggregate demand, which in turn can decrease GDP.
Step-by-step explanation:
The goal to decrease aggregate demand for an economy using a tight monetary policy involves implementing measures that can influence imports and exports. To achieve this, the government can opt for B) Increasing interest rates to reduce imports. A higher interest rate regime can lead to an appreciation of the domestic currency, making exports more expensive for foreign buyers and thus reducing demand for them. Conversely, the stronger currency would make imports cheaper for domestic consumers, thereby increasing import levels. This dynamic would result in a decrease in net exports (exports minus imports), which consequently lowers aggregate demand and may lead to a decrease in GDP. However, it's important to note that while cheaper imports could reduce aggregate demand, they can also stimulate aggregate supply, potentially bringing GDP back to potential at a lower price level.