An open market sale of bonds could lead to an increase in equilibrium output if the change in the federal funds rate is less than expected.

Name: An open market sale of bonds could lead to an increase in equilibrium output if the change in the federal funds rate is less than expected.
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Question

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An unexpected decrease in the federal funds rate would lead to an increase in the money supply, which would in turn lead to an increase in aggregate demand and equilibrium output.

An Open Market Sale of Bonds Could Lead to an Increase