When the federal reserve increases the money supply, at a given price level the amount of output demanded is lower and the aggregate demand curve shifts inward.
Federal reserve is the central banking system of the United States that keeps a check on the efficient working of the small financial organizations. They are also important to build the economical relation with several countries and maintain a wealthy economy of the country.
Aggregate demand takes into account the entire demand of the domestically manufactured goods. It includes the consumer goods, services, and capital goods. It is the total money obtained by the exchange of these products.
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