What does a vertical supply curve of money indicate?
A) It indicates that the lower the interest rate, the higher the opportunity cost of holding assets in the form of money.
B) It indicates that the quantity of money supplied is independent of the interest rate.
C) It indicates that the larger the supply of money, the higher the interest rate, all things equal.
D) It indicates that the quantity of money supplied depends on the interest rate.

Question

What does a vertical supply curve of money indicate?  
A) It indicates that the lower the interest rate, the higher the opportunity cost of holding assets in the form of money. 
B) It indicates that the quantity of money supplied is independent of the interest rate. 
C) It indicates that the larger the supply of money, the higher the interest rate, all things equal. 
D) It indicates that the quantity of money supplied depends on the interest rate.

Quizplus · Accepted Answer

A vertical supply curve of money indicates that the quantity of money supplied is independent of the interest rate. This suggests that monetary authorities (such as central banks) can alter the money supply without affecting interest rates.

What Does a Vertical Supply Curve of Money Indicate