Figure 11-1
-Refer to Figure 11-1. What happens when the money supply curve shifts from MS1 to MS2?

Question

Figure 11-1 
-Refer to Figure 11-1. What happens when the money supply curve shifts from MS1 to MS2?

Quizplus · Accepted Answer

When the money supply curve shifts from MS1 to MS2, the equilibrium price level increases. This is because when there is more money available in the economy, individuals and firms have more money to spend, causing an increase in demand for goods and services. This increase in demand results in higher prices, as firms are able to charge more for their products.

Figure 11-1 -Refer to Figure 11-1. What Happens When the Money Supply