Exhibit 20-2 Money market demand and supply curves

-Starting from an equilibrium at E₁ in Exhibit 20-2,a rightward shift of the money supply curve from MS₁ to MS₂ would cause an excess:

Question

Exhibit 20-2 Money market demand and supply curves
 
-Starting from an equilibrium at E₁ in Exhibit 20-2,a rightward shift of the money supply curve from MS₁ to MS₂ would cause an excess:

Quizplus · Accepted Answer

A rightward shift of the money supply curve indicates an increase in the money supply, leading to an excess supply of money. This excess supply prompts people to buy bonds, as they have more money than they wish to hold in liquid form.

Exhibit 20-2 Money Market Demand and Supply Curves