The effect of a decrease in interest rates upon economic growth is an example of positive economics

Refer to Figure 3-5. In a free market such as that depicted above, a surplus is eliminated by

A) a price decrease, decreasing the supply and increasing the demand. B) a price increase, increasing the quantity supplied and decreasing the quantity demanded. C) a price increase, increasing the supply and decreasing the demand. D) a price decrease, decreasing the quantity supplied and increasing the quantity demanded.

If the Fed decides to sell T-bills, it increases the supply of T-bills. How will this affect the price of T-bills and the interest rate?

A. T-bill prices fall and interest rates fall. B. T-bill prices rise and interest rates rise. C. T-bill prices rise and interest rates fall. D. T-bill prices fall and interest rates rise.