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In the above figure, if the interest rate is 2 percent per year, the quantity of money demanded is
A)greater than the quantity of money supplied, and the demand for money curve will shift.
B)greater than the quantity of money supplied, and the interest rate will change.
C)less than the quantity of money supplied, and the demand for money curve will shift.
D)less than the quantity of money supplied, and the interest rate will change.
E)greater than the quantity of money supplied, and the supply of money curve will shift.

Question

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In the above figure, if the interest rate is 2 percent per year, the quantity of money demanded is
A)greater than the quantity of money supplied, and the demand for money curve will shift. 
B)greater than the quantity of money supplied, and the interest rate will change. 
C)less than the quantity of money supplied, and the demand for money curve will shift. 
D)less than the quantity of money supplied, and the interest rate will change. 
E)greater than the quantity of money supplied, and the supply of money curve will shift.

Quizplus · Accepted Answer

When the interest rate is 2 percent per year and the quantity of money demanded is greater than the quantity supplied, the interest rate will adjust to restore equilibrium in the money market.

- In the Above Figure, If the Interest Rate Is 2