Refer to the table below.If the transactions demand for money is $400 billion, an increase in the money supply from $800 billion to $900 billion would cause the equilibrium interest rate to:
A)rise to 7 percent.
B)rise to 6 percent.
C)fall to 4 percent.
D)remain at 5 percent.

Question

Refer to the table below.If the transactions demand for money is $400 billion, an increase in the money supply from $800 billion to $900 billion would cause the equilibrium interest rate to: 
A)rise to 7 percent. 
B)rise to 6 percent. 
C)fall to 4 percent. 
D)remain at 5 percent.

Quizplus · Accepted Answer

According to the table, an increase in the money supply from $800 billion to $900 billion would shift the money supply curve to the right, causing the equilibrium interest rate to fall from 5 percent to 4 percent.

Refer to the Table Below