Figure 34-4

Multiple Choice

Figure 34-4.On the figure,MS represents money supply and MD represents money demand.
-Refer to Figure 34-4.Suppose the money-demand curve is currently MD₂.If the current interest rate is r₂,then

A) in response,the money-demand curve will shift rightward from its current position to establish equilibrium in the money market.
B) people will respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts.
C) bond issuers and banks will respond by lowering the interest rates they offer.
D) there is a shortage of money.