The figure shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market purchase of government securities that changes the quantity of reserves by​ $25 billion, then the federal funds rate will​ ________.

A.change but more information is needed to determine by how much
B.remain at 6 percent a year
C.rise to 8 percent a year
D. fall to 4 percent a year
E.None of the above answers is correct.

ANSWER:

D. fall to 4 percent a year