Figure 11-2

-Refer to Figure 11-2.To shift the demand curve from D₁ to D₂, the Fed _______ bonds in the open market which _______ the money supply.

Question

Figure 11-2 -Refer to Figure 11-2.To shift the demand curve from D₁ to D₂, the Fed _______ bonds in the open market which _______ the money supply.

Quizplus · Accepted Answer

To shift the demand curve to the right, the Fed needs to increase the money supply. One way to do this is by buying bonds in the open market, which injects money into the economy and increases the supply of money. Therefore, the correct answer is buying and increasing (choice C).

Figure 11-2 -Refer to Figure 11-2.To Shift the Demand Curve from D1

Figure 11-2 -Refer to Figure 11-2.To Shift the Demand Curve from D₁