In the best case scenario, what is the Fed's response to a negative demand shock?
A. The Fed will decrease the growth rate of the money supply to offset the negative demand shock.
B. The Fed will increase the growth rate of the money supply to offset the negative demand shock.
C. The Fed will increase government spending to offset the negative demand shock.
D. The Fed will decrease government spending to offset the negative demand shock.
Ans: B. The Fed will increase the growth rate of the money supply to offset the negative demand shock.
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