The figure above shows the market for loanable funds.The supply of loanable funds curve shifts rightward.
-The change illustrated in the figure above can be the result of the Fed ________ government securities in the open market and will ultimately lead to ________ in aggregate demand.

Question

Quizplus · Accepted Answer

The Fed buying government securities in the open market shifts the supply of loanable funds curve rightward, as it increases the amount of loanable funds available in the market. This ultimately leads to an increase in aggregate demand, as firms and individuals can now borrow more at a lower interest rate.

The Figure Above Shows the Market for Loanable Funds