-Refer to Figure 14-6 $\left. \mathrm { M } _ { 2 } ^ { \mathrm { S } } \right)$

Multiple Choice

-Refer to Figure 14-6.Suppose the Fed increases the money supply (to $\left. \mathrm { M } _ { 2 } ^ { \mathrm { S } } \right)$ ) .As a result,the interest rate falls initially to 6 percent.After spending and GDP change,what will happen to the interest rate?

A) It will remain at 6 percent.
B) It will rise as the money supply curve shifts back toward $\mathrm { M } _ { 1 } ^ { \mathrm { S } }$
C) It will rise as the money demand curve shifts to the right.
D) It will fall as the money supply curve shifts farther to the right.
E) It will fall as the money demand curve shifts to the left.