Exhibit 20-6  Money, Investment and Product Markets in Exhibit 20-6

Multiple Choice

Exhibit 20-6  Money, investment and product markets In Exhibit 20-6, an increase in the money supply from MS₁ to MS₂ causes:

A) interest rates to fall from i₁ to i₂ and the quantity demanded of investment to decrease from I₂ to I₁.
B) interest rates to fall from i₁ to i₂ and aggregate demand to shift from AD₂ to AD₁.
C) interest rates to fall from i₁ to i₂ and the quantity demanded of investment to increase from I₁ to I₂.
D) interest rates to rise from i₂ to i₁ and the quantity demanded of investment to remain the same.
E) interest rates to rise from i₂ to i₁ and aggregate demand to shift from AD₁ to AD₂.