Use the following to answer questions . Exhibit: Monetary Policy 1 -(Exhibit: Monetary Policy 1) To shift the demand curve from D₁ to D₂, the Fed will be A) buying bonds in the open market which decrease the money supply. B) selling bonds in the open market which decrease the money supply. C) buying bonds in the open market which increases the money supply. D) selling bonds in the open market which increases the money supply.

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To shift the demand curve to the right, the Fed needs to increase the money supply. This can be accomplished by buying bonds in the open market, which injects more money into the economy.

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