What will be the impact on price and GDP when Central Bank sells bonds?
What will be the impact on price and GDP when Central Bank purchases bonds?
a) When the Central Bank sells bonds, it will decrease the money supply in the economy, leading to an increase in interest rates. This will result in a decrease in investment and consumer spending, causing a decrease in GDP. Additionally, the increase in interest rates will lead to a decrease in bond prices.

b) When the Central Bank purchases bonds, it will increase the money supply in the economy, leading to a decrease in interest rates. This will result in an increase in investment and consumer spending, causing an increase in GDP. Additionally, the decrease in interest rates will lead to an increase in bond prices.

c) When the Central Bank sells bonds, it will increase the money supply in the economy, leading to a decrease in interest rates. This will resultin an increase in investment and consumer spending, causing an increase in GDP. Additionally, the decrease in interest rates will lead to a decrease in bond prices.
d) When the Central Bank purchases bonds, it will decrease the money supply in the economy, leading to an increase in interest rates. This will result in a decrease in investment and consumer spending, causing a decrease in GDP. Additionally, the increase in interest rates will lead to an increase in bond prices.