Iwill give suppose the federal reserve increases the money supply. in at least four sentences, explain the effects of this action on interest rates, consumption, investments, and gross domestic product and what would cause them to make this decision.

A decrease in interest rates.lower rates makes borrowing less costly to consumers,businesses and government,so consumption increases.Increased money supply stimulates output and employment.Fed can achieve this by purchasing US government securitiesbanks are able to borrow at lower interest rates from the Fed.Increase in the money supply is mirrored by an equal increase in nominal output or GDP.