When experiencing a recession caused by decreased aggregate demand what is the best action the Fed could take to close contractionary gap?

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In general, the most important tool that the Fed has at its disposal is open market operations.  This tool is the most important because it can be used on a day-to-day basis and to make fine adjustments to the money supply.  This makes it the most useful in ordinary circumstances.

However, in the case of a recession caused by a drop in aggregate demand, the Fed’s ability to change interest rates can be...

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