Figure 26-9
-Refer to Figure 26-9. In the figure above suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve?
A) a decrease in income taxes
B) an increase in the required reserve ratio
C) an open market purchase of Treasury bills
D) an open market sale of Treasury bills

Question

Figure 26-9 
-Refer to Figure 26-9. In the figure above suppose the economy is initially at point A. The movement of the economy to point B as shown in the graph illustrates the effect of which of the following policy actions by the Federal Reserve?
A) a decrease in income taxes 
B) an increase in the required reserve ratio 
C) an open market purchase of Treasury bills 
D) an open market sale of Treasury bills

Quizplus · Accepted Answer

An open market purchase of Treasury bills by the Federal Reserve increases the money supply, which typically lowers interest rates and stimulates economic activity, moving the economy from point A to point B.

Figure 26-9 -Refer to Figure 26-9. in the Figure Above Suppose the Above