FIGURE 27-2 Refer to Figure 27-2.Starting at equilibrium E 0 ,an increase in the supply of money will result in the

An increase in the supply of money shifts the MS curve to the right. This results in a lower interest rate, as shown by the downward movement along the M D curve. Therefore, choice B is the correct answer.

FIGURE 27-2 Refer to Figure 27-2.Starting at equilibrium E 0 ,an increase in the supply of money will result in the

An increase in the supply of money shifts the MS curve to the right. This results in a lower interest rate, as shown by the downward movement along the M D curve. Therefore, choice B is the correct answer.

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FIGURE 27-2 Refer to Figure 27-2

Question 77

Multiple Choice

FIGURE 27-2 Refer to Figure 27-2.Starting at equilibrium E₀,an increase in the supply of money will result in the

A) shift of the M_S curve to the left and an increase in the interest rate.
B) shift of the M_S curve to the right and a fall in the interest rate.
C) downward movement along the M_Dcurve and a higher interest rate.
D) shift of the M_D curve to the left and a fall in the interest rate.
E) upward movement along the M_D curve and a lower interest rate.

Correct Answer: