Ceteris paribus,if the Fed sells bonds through open market operations,the money
A)Supply curve should shift rightward.
B)Supply curve should shift leftward.
C)Demand curve should shift rightward.
D)Demand curve should shift leftwarD.An open market sale decreases the money supply and shifts the curve to the left,resulting in a higher equilibrium interest rate.

Question

Quizplus · Accepted Answer

An open market sale by the Fed leads to a decrease in the money supply, which shifts the supply curve to the left. This, in turn, results in a higher equilibrium interest rate. Hence, the correct choice is B, i.e., the supply curve should shift leftward.

Ceteris Paribus,if the Fed Sells Bonds Through Open Market Operations,the