A bond is being sold that will pay the owner of the bond $10,000 in one year. The price of the bond is 9,500 and the Federal Reserve would like to reduce the interest rate. The Federal Reserve should...

Complete question:

A bond is being sold that will pay the owner of the bond $10,000 in one year. The price of the bond is 9,500 and the Federal Reserve would like to reduce the interest rate. The Federal Reserve should...

A. Sell bonds to the public, increasing the amount of bonds available, which increases the price of bonds.

B. Purchase bonds, driving up the price of bonds.

C. Purchase bonds, driving down the price of bonds.

D. Increase the amount paid by bonds.

The Federal Reserve should Purchase bonds, driving up the price of bonds.

Explanation:

Throughout the United States, a healthy and the economy is maintained by the Federal Reserve (Fed) by low rates and full jobs-the two constitutional mandates.

The Fed has done so consistently through regulation of short-term rates of interest, open market (OMO) practices and reserve change criteria. The Fed has created new tools to counter the economic downturn that occurred during the 2007 subprime downturn.

answer/// real gdp decreases to y3 and the price level falls to p3;