Exhibit 20-6 Money, investment and product markets
-In Exhibit 20-6,a move from MS₁ to MS₂:
A) increases the money supply, causing the interest rate to rise from i₂ to i₁.
B) increases the money supply, causing the interest rate to fall from i₁ to i₂.
C) decreases the money supply, causing the interest rate to rise from i₂ to i₁.
D) decreases the money supply, causing the interest rate to fall from i₁ to i₂.
E) has no effect on the money supply or the interest rate.
Correct Answer:
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