Based on macro-economic theory, according to liquidity preference theory, the money-supply curve would shift rightward "if the Federal Reserve chose to increase the money supply."
The liquidity preference theory is an economic theory based on the idea that people or investors generally prefer to hold cash or any other form of liquid holdings.
This implies that the economy would be filled with more money in circulation, making the money-supply curve shift rightward.
However, the Federal government can influence this situation by increasing the money supply.
Hence, in this case, it is concluded that the correct answer is option A. "if the Federal Reserve chose to increase the money supply."
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