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Figure: Changes in the Money Supply
-(Figure: Changes in the Money Supply) Look at the figure Changes in the Money Supply. If the supply of money shifts from S₁ to S₂, the Federal Reserve must have _____ Treasury bills in the open market.

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Use the following to answer questions:
Figure: Changes in the Money Supply

-(Figure: Changes in the Money Supply) Look at the figure Changes in the Money Supply. If the supply of money shifts from S₁ to S₂, the Federal Reserve must have _____ Treasury bills in the open market.

Quizplus · Accepted Answer

If the supply of money shifts from S₁ to S₂, the Federal Reserve must have bought Treasury bills in the open market in order to increase the money supply. This is because when the Federal Reserve buys Treasury bills, it injects new money into the economy, thereby increasing the money supply.

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