Final answer:
If the Federal Reserve buys bonds, the money supply curve shifts rightward, as this act increases the money supply in the economy.
The correct answer is A.
Step-by-step explanation:
When the Federal Reserve (the Fed) buys bonds, this is an example of an expansionary monetary policy. The purchase of bonds increases the money supply in the economy because it involves the central bank paying out cash to the sellers of the bonds, which in turn increases the reserves of the banks where this cash is deposited. In effect, this action shifts the money supply curve to the right on a graph where the value of money is represented on the vertical axis and the quantity of money on the horizontal axis.