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If There Is a Leftward Shift of the Money Demand

Question 45

Multiple Choice

If there is a leftward shift of the money demand curve,which of the following should the Fed do if it wants to keep output stable?


A) Lower its interest rate target
B) Sell bonds in the open market
C) Wait,since output usually does not change when the money demand curve shifts
D) Raise its interest rate target
E) Buy bonds in the open market.

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