With the value of money on the vertical axis, the money supply curve is
A) Upward sloping because people supply a larger quantity of money when the value of money increases.
B) Downward sloping because people supply a larger quantity of money when the value of money decreases.
C) horizontal because we assume the central bank controls the money supply
D) Vertical because we assume the central bank controls the money supply.

Question

Quizplus · Accepted Answer

The vertical money supply curve assumes that the central bank controls the money supply, meaning that the quantity of money supplied is fixed regardless of the value of money. This is because the central bank can adjust the money supply at any point along the vertical curve.

With the Value of Money on the Vertical Axis, the Money