Why is the money supply curve vertical?
A)because the quantity of money supplied increases when the value of money increases
B)because the quantity of money supplied increases when the value of money decreases
C)because the quantity of money supplied increases only if people desire to hold more money
D)because the quantity of money supplied increases only if the central bank increases the money supply

Question

Quizplus · Accepted Answer

The money supply curve is vertical because the quantity of money supplied is determined by the central bank and not by the value of money or people's desire to hold money. The central bank has the power to increase or decrease the money supply, and this is reflected in the vertical position of the money supply curve.

Why Is the Money Supply Curve Vertical