Refer to Figure 15.7.Suppose the Federal Reserve buys bonds in the open market.The money supply will ________ and cause a shift from point ________.

Question

Quizplus · Accepted Answer

When the Federal Reserve buys bonds in the open market, it injects money into the economy. This increases the money supply and shifts the economy from point C to point B. Therefore, the correct choice is A, which states that the money supply will increase and cause a shift from point C to point B.