Exhibit 20-5 Money, Investment and Product Markets

Exhibit 20-5 Money, Investment and product markets

-In Exhibit 20-5,when the money supply increases from MS₁ to MS₂,the equilibrium interest rate:

A) remains unchanged.
B) increases from i₂ to i₁, increasing investment spending from i₁ to i₂.
C) increases from i₂ to i₁, decreasing investment spending from i₂ to i₁.
D) decreases from i₁ to i₂, increasing investment spending from i₁ to i₂.
E) decreases from i₁ to i₂, decreasing investment spending from i₂ to i₁.