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Scenario: the Following Figure Shows the Federal Funds Market

Question 8

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Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at point (R₀, i₀) .
Scenario: The following figure shows the federal funds market. Assume that the market of reserves is in equilibrium at point (R₀, i₀) . -Refer to the scenario above.If the Fed undertakes an open market purchase of bonds,________. A) the reserves supply curve shifts from RS₁ to RS₀ B) the reserves supply curve shifts from RS₀ to RS₁ C) the reserves supply curve shifts from RS₀ to RS₂ D) the reserves supply curve shifts from RS₂ to RS₁
-Refer to the scenario above.If the Fed undertakes an open market purchase of bonds,________.


A) the reserves supply curve shifts from RS₁ to RS₀
B) the reserves supply curve shifts from RS₀ to RS₁
C) the reserves supply curve shifts from RS₀ to RS₂
D) the reserves supply curve shifts from RS₂ to RS₁

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