Use the following to answer questions:
Figure: Monetary Policy I 
-(Figure: Monetary Policy I) Refer to Figure: Monetary Policy I. If the economy is initially in equilibrium at E1 and the central bank chooses to buy Treasury bills, _____ shift to _____ a(n) _____ gap.
Definitions:
Resource Demand
The desire and ability of firms or individuals to acquire resources or inputs necessary for production, influenced by their price and productivity.
Demand Decrease
A reduction in the quantity of a product or service wanted by consumers at any given price level.
Production Function
A mathematical relationship expressing the maximum output that can be produced from a given set of inputs in the production process.
Marginal Product
The additional output that results from using one more unit of a production factor, keeping all other factors constant.
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