Multiple Choice
Figure 34-4. On the figure, MS represents money supply and MD represents money demand. 
-Refer to Figure 34-4. Suppose the current equilibrium interest rate is r3. Let Y3 represent the corresponding quantity of goods and services demanded, and let P3 represent the corresponding price level. Starting from this situation, if the Federal Reserve decreases the money supply and if the price level remains at P3, then
A) there will be an increase in the equilibrium quantity of goods and services demanded.
B) there will be a decrease in the equilibrium interest rate.
C) the aggregate-demand curve will shift to the right.
D) fewer firms will choose to borrow to build new factories and buy new equipment.
Correct Answer:
Verified
Correct Answer:
Verified
Q1: If the MPC is 0.8 and there
Q2: What actions could be taken to stabilize
Q5: When the interest rate is above the
Q11: Suppose there is a tax increase.To stabilize
Q67: People will want to hold less money
Q94: Permanent tax cuts shift the AD curve<br>A)farther
Q117: Which of the following is not a
Q135: According to liquidity preference theory,an increase in
Q143: For the U.S. economy, the most important
Q201: Depending on the size of the multiplier