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-Refer to Figure

Question 16

Multiple Choice

-Refer to Figure . Assume the Fed is targeting a particular level of money supply (M<sub>t</sub>) as measured by one of the monetary aggregates. If money demand increases from D to D', what will happen if the Fed continues to leave the money supply unchanged? A) The interest rate will rise. B) The interest rate will fall. C) The money demand curve will shift leftward. D) The money supply curve will increase.
-Refer to Figure . Assume the Fed is targeting a particular level of money supply (Mt) as measured by one of the monetary aggregates. If money demand increases from D to D', what will happen if the Fed continues to leave the money supply unchanged?


A) The interest rate will rise.
B) The interest rate will fall.
C) The money demand curve will shift leftward.
D) The money supply curve will increase.

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