Figure 17-3

-Refer to Figure 17-3.In the figure above,when the money supply shifts from MS₁ to MS₂,at the interest rate of 3 percent households and firms will
A) buy Treasury bills.
B) sell Treasury bills.
C) neither buy nor sell Treasury bills.
D) want to hold more money.

Question

Figure 17-3
 
-Refer to Figure 17-3.In the figure above,when the money supply shifts from MS₁ to MS₂,at the interest rate of 3 percent households and firms will
A) buy Treasury bills. 
B) sell Treasury bills. 
C) neither buy nor sell Treasury bills. 
D) want to hold more money.

Quizplus · Accepted Answer

At an interest rate of 3 percent, households and firms will want to hold more money, as indicated by the movement along the LM curve from point A to point B.

Figure 17-3 -Refer to Figure 17-3.In the Figure Above,when the Money Supply