If the Fed Buys Government Bonds on the Open Market,which

Multiple Choice

If the Fed buys government bonds on the open market,which of the following is likely to occur?

A) The money supply will expand.
B) The market rate of interest on government bonds will increase.
C) The market rate of interest on corporate bonds will increase.
D) The amount of investment spending will decrease.
E) All of the choices are likely to occur.