Figure 11-1

-Refer to the Figure 11-1.What happens when the money supply curve shifts from MS₁ to MS₂?
A)The equilibrium value of money decreases.
B)The equilibrium price level decreases.
C)The supply of money decreases.
D)The demand for goods and services decreases.

Question

Figure 11-1
 
-Refer to the Figure 11-1.What happens when the money supply curve shifts from MS₁ to MS₂?
A)The equilibrium value of money decreases. 
B)The equilibrium price level decreases. 
C)The supply of money decreases. 
D)The demand for goods and services decreases.

Quizplus · Accepted Answer

When the money supply curve shifts from MS₁ to MS₂, it indicates an increase in the money supply. This typically leads to a decrease in the equilibrium value of money, as more money in the economy can lead to higher price levels, reducing the purchasing power of money.

Figure 11-1 -Refer to the Figure 11-1.What Happens When the Money Supply