(3) Using the graphs above, suppose the Central Bank buys government bonds from the public. Consequently, the (demand, supply) of money (increases, decreases) and the (demand supply) curve of money shifts to the (right, left ) . Interest rates (increase, decrease) and households (increase, decrease) spending while firms (increase decrease) investments. The quantity demanded for goods and services (increases, decreases) and the aggregate demand curve shifts to the (left, right) (4) Using the graphs above, suppose the Central Bank sells government bonds to the public. Consequently, the (demand, supply)_ of money (increases, decreases) =and the (demand supply) curve of money shifts to the (right, left) .Interest rates (increase, decrease) and households (increase, decrease) spending while firms (increase decrease) investments. The quantity demanded for goods and services (increases, decreases) and the aggregate demand curve shifts to the (left, right) B. Fiscal Policy (5) Suppose the MPC = .8 and government spending increases by $20 billion. Assuming there is no crowding-out effect, this will cause aggregate demand to increase by =$ 10 billion:. The multiplier is equal to _5_. if there is a crowding-out effect equal to $60 billion, the increase in government spending would increase aggregate demand by (6) Suppose the government decides to decrease taxes. Assuming there is no crowding-out effect, this will cause the aggregate demand curve to shift to the (left. right) (7) Suppose the government decides to increase taxes. Assuming there is no crowding-out effect, this will cause the aggregate demand curve to shift to the (left. right)