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Exhibit 20-1  Money Market Demand and Supply Curves Beginning from an Equilibrium

Question 132

Multiple Choice

Exhibit 20-1  Money market demand and supply curves Exhibit 20-1  Money market demand and supply curves Beginning from an equilibrium at E<sub>1</sub> in Exhibit 20-1, a decrease in the money supply from $150 billion to $100 billion causes people to: A) sell bonds and drive the price of bonds down. B) sell bonds and drive the price of bonds up. C) buy bonds and drive the price of bonds down. D) buy bonds and drive the price of bonds up. Beginning from an equilibrium at E1 in Exhibit 20-1, a decrease in the money supply from $150 billion to $100 billion causes people to:


A) sell bonds and drive the price of bonds down.
B) sell bonds and drive the price of bonds up.
C) buy bonds and drive the price of bonds down.
D) buy bonds and drive the price of bonds up.

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