Figure 11-5 -Refer to Figure 11-5. If the Economy Is at Point

Multiple Choice

Figure 11-5
-Refer to Figure 11-5. If the economy is at point c, the Federal Reserve can close the output gap by buying bonds. In the bond market,

A) the supply curve shifts right, leading to a decrease in bond prices and an increase in interest rates.
B) the demand curve shifts right, leading to an increase in bond prices and a decrease in interest rates.
C) the supply curve shifts left, leading to an increase in bond prices and an increase in interest rates.
D) the demand curve shifts left, leading to a decrease in bond prices and an increase in interest rates.