Suppose there is a simultaneous Fed sale of bonds and increase in consumer confidence.We know with certainty that these two simultaneous events will cause

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A Fed sale of bonds will lead to a decrease in the money supply, causing an increase in the interest rate. An increase in consumer confidence will lead to higher levels of consumption, which may increase output in the short run but will eventually result in inflationary pressures, which will increase the interest rate. Therefore, the simultaneous occurrence of these events will result in an increase in the interest rate (i).

Suppose There Is a Simultaneous Fed Sale of Bonds and Increase