If there is an autonomous decrease in spending (a leftward shift in th

If there is an autonomous decrease in spending (a leftward shift in the aggregate demand curve) and the Fed wishes to hold real income constant, then the Fed would:

A) decrease the money supply yielding a leftward shift in the aggregate demand curve.
B) increase the money supply yielding a rightward shift in the aggregate demand curve.
C) hold the money supply constant.
D) none of the above.

ANSWER

B