Figure 34-4 -Refer to Figure 34-4. Suppose the money-demand curve is currently MD₂. If the current interest rate is r₂, then A)the quantity of money that people want to hold is less than the quantity of money that the Federal Reserve has supplied. B)people will respond by selling interest-bearing bonds. C)bond issuers and banks will respond by lowering the interest rates they offer. D)in response, the money-demand curve will shift rightward from its current position to establish equilibrium in the money market.

Question

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The Answer of Figure 34-4 -Refer to Figure 34-4. Suppose the money-demand curve is currently MD₂. If the current interest rate is r₂, then A)the quantity of money that people want to hold is less than the quantity of money that the Federal Reserve has supplied. B)people will respond by selling interest-bearing bonds. C)bond issuers and banks will respond by lowering the interest rates they offer. D)in response, the money-demand curve will shift rightward from its current position to establish equilibrium in the money market.

Figure 34-4 ​

Figure 34-4