According to Keynesian model the purchase of government bonds by the Federal Reserve will increase the aggregate demand, as the money supply will get increased in the economy, (d) is correct answer.
The total quantity of demand for any and all finished products and services generated in an economy is measured as aggregate demand. The total amount of money spent on those products and services at a particular price level and period is known as aggregate demand.
Since the two indicators were computed in same way, aggregate demand is equal to GDP over through the long run. Aggregate demand is the desire or demand for those products, whereas GDP is the total quantity of goods and services produced in an economy. A result of employing identical computation techniques, changes in aggregate demand and Gross domestic product are coordinated. As a result of purchase of purchase of government bonds by Federal reserve the money supply will increase in the economy causing increase in aggregate demand.
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