Answer:
increase spending
Explanation:
In order to try to rebound the economy the FED has three options:
- Carry on an expansionary monetary policy which increases the money supply and decreases interest rates, which should increase aggregate demand.
- Increase government spending, which should increase total aggregate demand.
- Decrease taxes, which would increase the amount of disposable income held by consumers and businesses, which should also increase aggregate demand.
The problem is that nothing is free; an expansionary monetary policy increase the inflation rate, an increase in government spending and a decrease in taxes increases the government deficit and national debt (and the interests paid on them).
