Refer to Figure 10-6.

Question 119
Multiple Choice

Refer to Figure 10-6. If the Fed wants to encourage investment and expand the economy, it would conduct A) an expansionary monetary policy such as an open market purchase. The results of such a policy are represented in Panel (a). B) a contractionary monetary policy such as an open market sale. The results of such a policy are represented in Panel (b). C) an expansionary monetary policy such as an open market sale. The results of such a policy are represented in Panel (a). D) a contractionary monetary policy such as an open market purchase. The results of such a policy are represented in Panel (a).