If the Fed sells bonds in an open market operation,which of the following is most likely to occur?
A) The equilibrium level of GDP decreases
B) The money supply increases
C) The interest rate falls
D) The aggregate expenditure line shifts upward
E) The open market operation is said to be expansionary.

Question

Quizplus · Accepted Answer

When the Fed sells bonds, it decreases the money supply, which typically leads to higher interest rates and a decrease in the equilibrium level of GDP.

If the Fed Sells Bonds in an Open Market Operation,which