If the Fed responds to an increase in aggregate demand by increasing the quantity of money,
A. nothing happens because aggregate demand had already increased.
B. output will begin to decrease more rapidly than otherwise.
C. money wage rates will fall to reduce the unemployment.
D. there will be continued inflation.
Answer:D
If the Fed responds to an increase in aggregate demand by increasing the quantity of money,
A. nothing happens because aggregate demand had already increased. B. output will begin to decrease more rapidly than otherwise. C. money wage rates will fall to reduce the unemployment. D. there will be continued inflation.