Figure 34-5

Multiple Choice

Figure 34-5.On the figure,MS represents money supply and MD represents money demand.
-Refer to Figure 34-5.A shift of the money-demand curve from MD₂ to MD₁ is consistent with which of the following sets of events?

A) The government cuts taxes,resulting in an increase in people's incomes.
B) The government reduces government spending,resulting in a decrease in people's incomes.
C) The Federal Reserve increases the supply of money,which decreases the interest rate.
D) All of the above are correct.