Figure 14-2
-Refer to Figure 14-2. Which panel represents the result of the purchase of bonds in the open market by the Fed?

Question

Figure 14-2 
-Refer to Figure 14-2. Which panel represents the result of the purchase of bonds in the open market by the Fed?

Quizplus · Accepted Answer

When the Fed purchases bonds in the open market, it increases the money supply, which typically leads to a decrease in interest rates. This is represented by a movement from A to B in Panel (c), indicating a shift in the money supply curve to the right.

Figure 14-2 -Refer to Figure 14-2. Which Panel Represents the Result of the Result