What does an increase in the money supply typically aim to do?

An increase in the money supply is typically implemented to stimulate economic growth. By increasing the amount of money circulating in the economy, consumers and businesses have greater access to funds, which can lead to higher spending on goods and services. This increased demand can then encourage businesses to invest and expand, creating jobs and further fueling economic activity. The rationale behind this approach is rooted in the principles of monetary policy, where central banks often increase money supply during economic downturns to encourage lending and spending, thus promoting overall economic growth.

In contrast, decreasing aggregate demand would not align with the goals of increasing the money supply, as the aim is to encourage demand rather than reduce it. While controlling unemployment rates is an important aspect of economic management, an increase in the money supply specifically focuses on stimulating growth rather than directly managing unemployment rates. Lastly, increasing interest rates is typically a measure taken when there is a need to cool down an overheated economy or manage inflation, which is contrary to the approach of increasing the money supply in order to stimulate economic activity.