Monetary or Fiscal Policy Response to the Aftermath of Shocks For this section, assume the aftermath of the shock (analyzed in the previous section) has already happened. You are now describing the policy response (monetary of fiscal) and the effects of this policy - one policy at a time. Question 5 (4 points) Saved Question 5 options: In response to a positive demand shock to follow its mandate, the Fed should (raise, decrease) raise the Federal Funds Rate (i.e., the nominal interest rate). Because inflation (does, does not) does not