Question

if the central bank wants to expand aggregate demand, it can ________ the money supply, which would ________ the interest rate.

Answer 1

If the Central Bank wants to expand aggregate demand, it can increase the money supply, which would decrease the interest rate. The increase in the spending of the government will always increase the output and shift the curve of the aggregate demand to the right.The steps taken should be long term to get a good and positive effect.