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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. Federal Reserve policy to increase the supply of money, hence to lower the interest rate from 6% to 4%, is accomplished by action that _____ the _____ Treasury bills.

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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. Federal Reserve policy to increase the supply of money, hence to lower the interest rate from 6% to 4%, is accomplished by action that _____ the _____ Treasury bills.

Quizplus · Accepted Answer

The Federal Reserve increases the demand for Treasury bills, which raises their price and lowers the interest rate, thereby increasing the money supply.

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