Ceteris Paribus,if the Fed Was Targeting the Quantity of Money

Multiple Choice

Ceteris paribus,if the Fed was targeting the quantity of money supplied and money demand dropped,the Fed would likely ________. If the Fed was instead targeting interest rates and money demand dropped,the Fed would likely ________.

A) increase the money supply; do nothing
B) do nothing; decrease the money supply
C) decrease the money supply; do nothing
D) do nothing; increase the money supply
E) increase the money supply; decrease the money supply