Figure 34-2

Multiple Choice

Figure 34-2. 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 34-2. Assume the money market is always in equilibrium. Under the assumptions of the model,

A) the real interest rate is lower at Y2 than it is at Y1.
B) the quantity of money is the same at Y1 as it is at Y2.
C) the price level is lower at r2 than it is at r1.
D) All of the above are correct.