Solved

Figure 34-4

Question 425

Multiple Choice

Figure 34-4. On the figure, MS represents money supply and MD represents money demand. 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.
-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.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q14: According to classical macroeconomic theory,<br>A)output is determined

Q33: If the MPC is 3/5 then the

Q56: If households view a tax cut as

Q72: In response to the sharp decline in

Q90: Scenario 34-2.The following facts apply to a

Q98: Suppose that the government spends more on

Q110: Which of the following would not be

Q118: If the MPC = 0.75,then the government

Q124: Figure 34-2.On the left-hand graph,MS represents the

Q361: If the inflation rate is zero, then<br>A)both