Exhibit 16-1 Money Market Demand and Supply Curves

Exhibit 16-1 Money market demand and supply curves

As shown in Exhibit 16-1, assume the money supply curve shifts leftward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

A) higher investment, lower real GDP, and lower price level.
B) lower investment, lower real GDP, and lower price level.
C) higher investment, higher real GDP, and higher price level.
D) higher interest rate and no effect on real GDP or the price level.