When the Fed buys bonds the supply of money decreases and so aggregate demand shifts left. the supply of money decreases and so

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When the Fed buys bonds the supply of money decreases and so aggregate demand shifts left. the supply of money decreases and so

aggregate demand shifts right. the supply of money increases and so aggregate demand shifts left. the supply of money increases and so aggregate demand shifts right.

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1 answer:

stealth61 [152] · Answer 1 · 2022-03-08T05:27:11+03:00

Answer: The supply of money increases and so aggregate demand shifts right.

Explanation: When the Federal Government buy Bond they help to increase the amount of money available for the Banks to loan to Business entities, Organisations and individuals.

The Aggregate Demand will Shift to the right, signaling the Increase in the rate of Demand as a result of the Increase in the volume of Money in circulation within the Economy. Once consumers have money to spend or invest they will cause the Demand for goods and services to increase.