Figure 11.2 Alt text for Figure 11.2: In figure 11.2, a graph shows shift in money supply.
Long description for Figure 11.2: The x-axis is labelled, quantity of money, M (billions of dollars) , with values $90 and 95 marked.The y-axis is labelled, interest rate, i, with values 3 and 4% marked.3 lines are shown; MS1, MS2, and MD.Line MD begins at the top left corner and slopes down toward the end of the x-axis.Line Money supply MS1 is perpendicular to the x-axis, from point 95.Line MS2 is perpendicular to the x-axis, and begins from the value $90, to the left of line MS1.Line MD meets line MS1 at point (95, 3) , half way along both lines.Line MD meets line MS2 at point ($90, 4%) , approximately 3 quarters of the way along both lines.These points of intersection are connected to their respective coordinates on the y-axis using dotted lines.
-Refer to Figure 11.2.In the figure above, when the money supply shifts from MS₁ to MS₂, at the interest rate of 3 percent households and firms will

Question

Figure 11.2

Alt text for Figure 11.2: In figure 11.2, a graph shows shift in money supply.
Long description for Figure 11.2: The x-axis is labelled, quantity of money, M (billions of dollars) , with values $90 and 95 marked.The y-axis is labelled, interest rate, i, with values 3 and 4% marked.3 lines are shown; MS1, MS2, and MD.Line MD begins at the top left corner and slopes down toward the end of the x-axis.Line Money supply MS1 is perpendicular to the x-axis, from point 95.Line MS2 is perpendicular to the x-axis, and begins from the value $90, to the left of line MS1.Line MD meets line MS1 at point (95, 3) , half way along both lines.Line MD meets line MS2 at point ($90, 4%) , approximately 3 quarters of the way along both lines.These points of intersection are connected to their respective coordinates on the y-axis using dotted lines.
-Refer to Figure 11.2.In the figure above, when the money supply shifts from MS₁ to MS₂, at the interest rate of 3 percent households and firms will

Quizplus · Accepted Answer

When the money supply increases from MS1 to MS2, the interest rate falls below 3 percent. At an interest rate of 3 percent, households and firms will find it more attractive to sell bonds, as they can get a higher return than the new lower market interest rate.

Figure 112 Alt Text for Figure 11