Question

Using the money demand and money supply model, an open market purchase of Treasury securities by the Federal Reserve would cause the equilibrium interest rate to

Answer 1

Answer:

C. decrease

Explanation:

In the case when the money demand and the money supply model is used so the open market purchase would result the interest rate of equilibrium to decrease as if there is an open market purchase so it rise the money supply due to which the supply curve of the money move shiftward

Therefore the rate of interest should be decreased