Exhibit 15-1 Money market demand and supply curves

-As shown in Exhibit 15-1,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:

Question

Exhibit 15-1 Money market demand and supply curves
 
-As shown in Exhibit 15-1,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:

Quizplus · Accepted Answer

A leftward shift in the money supply curve typically leads to higher interest rates, which reduces investment. In the intermediate segment of the aggregate supply curve, this also results in lower real GDP and a lower price level.

Exhibit 15-1 Money Market Demand and Supply Curves