The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,an increase in the interest rate will cause a movement from:

A)point B to point A.
B)point A to point B.
C)DM to DM'.
D)DM to DM*.
E)point E to point D.

Question

The figure given below shows the interest rate on the vertical axis and the quantity of money on the horizontal axis.In this figure,an increase in the interest rate will cause a movement from:

A)point B to point A. 
B)point A to point B. 
C)DM to DM'. 
D)DM to DM*. 
E)point E to point D.

Quizplus · Accepted Answer

According to the figure, as the interest rate increases, the quantity of money demanded decreases. This results in a movement along the demand curve from point B to point A. Therefore, the correct answer is A.

The Figure Given Below Shows the Interest Rate on the Vertical