-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 which increases the money supply. This will cause the demand for money to decrease and the demand for goods and services to increase, leading to a shift from point C to point B.