-In the above figure, suppose the economy is at point D. Which of the following occurs as a result of an open market purchase of government securities by the Fed?

Question

Quizplus · Accepted Answer

An open market purchase of government securities by the Fed increases the money supply, leading to a decrease in the real interest rate. This lower interest rate encourages investment and can also lead to a depreciation of the currency, making exports more competitive.

-In the Above Figure, Suppose the Economy Is at Point