Figure 11-2 -Refer to Figure 11-2. To shift the demand curve from D₁ to D₂, the Fed will be A) buying bonds in the open market which decrease the money supply. B) selling bonds in the open market which decrease the money supply. C) buying bonds in the open market which increases the money supply. D) selling bonds in the open market which increases the money supply.

Question

Quizplus · Accepted Answer

Buying bonds in the open market increases the money supply, which can shift the demand curve from D1 to D2 by lowering interest rates and encouraging borrowing and spending.

Figure 11-2 -Refer to Figure 11-2. to Shift the Demand Curve from Demand