If the Fed Buys Bonds in an Open Market Operation,which

question 36

Multiple Choice

If the Fed buys bonds in an open market operation,which of the following is most likely to occur?

• A) the equilibrium level of GDP will decrease.
• B) the money supply will decrease.
• C) the aggregate demand curve will shift to the right.
• D) the interest rate will rise.
• E) the aggregate supply curve will shift to the left.

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Definitions:

Trades

The action of buying and selling goods and services, which can occur domestically within a country or internationally between countries.

Societal Members

Individuals who constitute a society, participating in its culture, norms, and economic activities.

Perfectly Competitive Market

A market structure characterized by many buyers and sellers, freedom of entry and exit, and a homogeneous product, leading to efficient pricing.

Hula Hoops

A popular toy consisting of a large hoop that can be twirled around the waist, limbs, or neck.