Exhibit 16-3 Money market demand and supply curves In Exhibit 16-3, assume an equilibrium at E₂ with the money supply at $100 billion and the interest rate at 15 percent. The Fed uses its policy tools to move the economy to a new equilibrium at E₁ with a money supply of 150 billion and an interest rate of 10 percent. As part of the adjustment to the new equilibrium, we would expect the:

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The Answer of Exhibit 16-3 Money market demand and supply curves In Exhibit 16-3, assume an equilibrium at E₂ with the money supply at $100 billion and the interest rate at 15 percent. The Fed uses its policy tools to move the economy to a new equilibrium at E₁ with a money supply of 150 billion and an interest rate of 10 percent. As part of the adjustment to the new equilibrium, we would expect the:

Exhibit 16-3 Money Market Demand and Supply Curves in Exhibit