Refer to Figure 13.1 to answer this question. If the Fed is conducting open market operations and the demand for bonds increases, the Fed must be: Figure 13.1 Bonds Graph - Upward sloping S curve intersects downward sloping D1 curve at Q1P1 and downward sloping D2 curve at Q2P2; right arrow points from D1 to D2; up arrow pointing from P1 to P2 Refer to Figure 13.1 to answer this question. If the Fed is conducting open market operations and the demand for bonds increases, the Fed must be: selling bonds, which increases the price of bonds and drives the rate of interest up. buying bonds, which increases the price of bonds and drives the rate of interest up. buying bonds, which increases the price of bonds and drives the rate of interest down. buying bonds, which decreases the price of bonds as well as the rate of interest