If the Federal Reserve wants to prevent a recession, it should . A. increase the money supply to raise interest rates and lower aggregate demand B. increase the money supply to lower interest rates and raise aggregate demand C. decrease the money supply to raise interest rates and lower aggregate demand D. decrease the money supply to lower interest rates and increase aggregate demand

B. Increase the money supply to lower interest rates and raise aggregate demand

Explanation:

If the federal reserve wants to prevent a recession which means an economic condition when GDP falls or economy faces a low or negative economic growth. Thus, first of all aggregate demand should increased to boost up the economy and money supply should increase to lower the interest rate then business will take more loans at lower rate and invest more in production to meet up the aggregate demand and increasing employment opportunities.

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