Figure 24-2.On the left-hand graph,MS represents the supply of money and MD represents the demand for money; on the right-hand graph,AD represents aggregate demand.The usual quantities are measured along the axes of both graphs.
-Refer to Figure 24-2.A decrease in Y from Y1 to Y2 is explained as follows:
A) The Federal Reserve increases the money supply,causing the money-demand curve to shift from MD1 to MD2; this shift of MD causes r to increase from r1 to r2; and this increase in r causes Y to decrease from Y1 to Y2.
B) An increase in P from P1 to P2 causes the money-demand curve to shift from MD1 to MD2; this shift of MD causes r to increase from r1 to r2; and this increase in r causes Y to decrease from Y1 to Y2.
C) A decrease in P from P2 to P1 causes the money-demand curve to shift from MD1 to MD2; this shift of MD causes r to increase from r1 to r2; and this increase in r causes Y to decrease from Y1 to Y2.
D) An increase in the price level causes the money-demand curve to shift from MD2 to MD1; this shift of MD causes r to decrease from r2 to r1; and this decrease in r causes Y to decrease from Y1 to Y2.
Correct Answer:
Verified
Q67: Figure 24-2.On the left-hand graph,MS represents the
Q68: Figure 24-3. Q69: Figure 24-2.On the left-hand graph,MS represents the Q71: Figure 24-2.On the left-hand graph,MS represents the Q71: As the interest rate falls, Q74: Figure 24-2.On the left-hand graph,MS represents the Q75: Figure 24-2.On the left-hand graph,MS represents the Q76: Figure 24-2.On the left-hand graph,MS represents the Q77: Figure 24-2.On the left-hand graph,MS represents the Q78: The interest rate would fall and the
A)the quantity of
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents