Figure 17-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.
-Refer to Figure 17-3. If the relevant money-supply curve is the one labeled MS₂, then

Question

Figure 17-3. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.

-Refer to Figure 17-3. If the relevant money-supply curve is the one labeled MS₂, then

Quizplus · Accepted Answer

The intersection of the MS₂ money-supply curve and the money-demand curve (MD) occurs at a point where the value of money in terms of goods and services is approximately 0.33 (one dollar purchases about one-third of a basket of goods and services). Therefore, option A is correct. Option B is incorrect, as one unit of goods and services is not equal to 33 cents in equilibrium. Option C is also incorrect, as there is no excess demand for money in equilibrium.