Exhibit 15-1 Money market demand and supply curves

-Beginning from an equilibrium at E₁ in Exhibit 15-1,a decrease in the money supply from $150 billion to $100 billion causes people to:

Question

Exhibit 15-1 Money market demand and supply curves
 
-Beginning from an equilibrium at E₁ in Exhibit 15-1,a decrease in the money supply from $150 billion to $100 billion causes people to:

Quizplus · Accepted Answer

A decrease in the money supply leads to higher interest rates, prompting people to sell bonds, which drives bond prices down.

Exhibit 15-1 Money Market Demand and Supply Curves