Exhibit 20-5  Money, Investment and Product Markets in Exhibit 20-5

Multiple Choice

Exhibit 20-5  Money, Investment and product markets In Exhibit 20-5, when the money supply increases from MS₁ to MS₂, the equilibrium interest rate:

A) remains unchanged.
B) increases from i₂ to i₁, increasing investment spending from I₁ to I₂.
C) increases from i₂ to i₁, decreasing investment spending from I₂ to I₁.
D) decreases from i₁ to i₂, increasing investment spending from I₁ to I₂.
E) decreases from i₁ to i₂, decreasing investment spending from I₂ to I₁.