Figure 16-2

Multiple Choice

Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.

-Refer to Figure 16-2. If the money-supply curve MS on the left-hand graph were to shift to the right, this would

A) represent an action taken by the Federal Reserve.
B) shift the AD curve to the left.
C) create, until the interest rate adjusted, an excess demand for money at the interest rate that equilibrated the money market before the shift.
D) All of the above are correct.