Money Supply (billions Investment (billions of of dollars Interest Rate dollars $50 7% $100 60 110 70 120 80 130 90 140 Assume that the MPC is 0.9 and the reserve requirement is 0.2. If the Federal Reserve needs to increase aggregate demand by $100 billion at each price level to move the economy back to full employment and the current interest rate is 6%, then the Federal Reserve should the money supply by _. O A) increase, $10 billion O B) decrease, $10 billion C) decrease, $20 billion O D) increase, $20 billion Question 11 (5 points) ) Listen Use the information in the following table to answer the next question. In the table, investment is in billions. 1) Interest (2) Investment (3) Investment Rate (billions of (billions of dollars) dollars) 4% $100 $80 90 70 80 160 70 50 8 160 40 Suppose the Fed increases the interest rate from 5 percent to 7 percent. As a result of this increase in the interest rate, using column (2) investment will decrease by $20 billion. increase by $10 billion. decrease by $10 billion. increase by $20 billion