An important way in which the relevant monetary authority (ECB or Bank of England) decreases the money supply is by selling bonds to the public. Using a supply and demand analysis for bonds, show what...

An important way in which the relevant monetary authority (ECB or Bank of England) decreases the money supply is by selling bonds to the public. Using a supply and demand analysis for bonds, show what effect this action has on interest rates. Is your answer consistent with what you would expect to find with the liquidity preference framework?