Suppose that currently, the economy is overutilizing its resources.is overutiliz

Question

Suppose that currently, the economy is overutilizing its resources.is overutilizing its resources. Which of the following correctly describes what type of monetary policy the Fed might choose and how the policy would change the economy? a.The Fed could use a contractionary monetary policy to reduce short - run aggregate supply and GDP. b. The Fed could use an contactionary monetary policy to reduce aggregate demand and GDP. c. The Fed could use an expansionary monetary policy to increase aggregate demand and GDP. d. The Fed could use an expansionary monetary policy to increase short run aggregate supply and GDP.

Explanation / Answer

. The Fed could use an contactionary monetary policy to reduce aggregate demand and GDP

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