(Figure: The Money Supply and Aggregate Demand) Use Figure: The Money Supply and Aggregate Demand. If the economy is in an inflationary gap, the Federal Reserve will Treasury bills, which will the money supply and Macmillan Learning interest rates. This is shown in panel Panel (a) Panel (b) Price level Price level SRAS SRAS P2 P1 P1 P2 AD1 AD2 AD2 AD1 Y1 Y2 Real GDP Y2 Y1 Real GDP (per year) (per year) O sell; increase, raise; (b) buy; increase; lower; (a) O sell; decrease; raise; (b) O buy; decrease; raise; (b)