According to the Keynesian transmission mechanism,if the Fed conducts an open market purchase of government securities,it may cause which of the following in the investment goods market?

Question

Quizplus · Accepted Answer

An open market purchase by the Fed increases the money supply, leading to lower interest rates. This causes a movement down along the investment demand curve, as lower interest rates make borrowing cheaper, encouraging more investment.

According to the Keynesian Transmission Mechanism,if the Fed Conducts an Open