Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at point (R₀, i₀) .
-Refer to the scenario above.If the Fed undertakes an open market sale of bonds,________.
A) the reserves supply curve shifts from RS₁ to RS₀
B) the reserves supply curve shifts from RS₀ to RS₁
C) the reserves supply curve shifts from RS₀ to RS₂
D) the reserves supply curve shifts from RS₁ to RS₂
Correct Answer:
Verified
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