If the Fed buys bonds in an open market operation,which of the following is most likely to occur?
A) the equilibrium level of GDP will decrease.
B) the money supply will decrease.
C) the aggregate demand curve will shift to the right.
D) the interest rate will rise.
E) the aggregate supply curve will shift to the left.

Question

Quizplus · Accepted Answer

When the Fed buys bonds, it increases the money supply, which typically lowers interest rates and encourages investment and consumption, leading to a rightward shift in the aggregate demand curve.

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