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.If the money-supply curve MS on the left-hand graph were to shift to the right,this would
A) represent an action taken by the Federal Reserve.
B) shift the AD curve to the left.
C) create,until the interest rate adjusted,an excess demand for money at the interest rate that equilibrated the money market before the shift.
D) All of the above are correct.

Question

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.If the money-supply curve MS on the left-hand graph were to shift to the right,this would
A) represent an action taken by the Federal Reserve. 
B) shift the AD curve to the left. 
C) create,until the interest rate adjusted,an excess demand for money at the interest rate that equilibrated the money market before the shift. 
D) All of the above are correct.

Quizplus · Accepted Answer

If the money-supply curve MS on the left-hand graph were to shift to the right, it would represent an action taken by the Federal Reserve. This would also create an excess supply of money at the interest rate that equilibrated the money market before the shift, not an excess demand as stated in option C. Additionally, it would result in a shift of the AD curve to the right, not the left as stated in option B. Therefore, only option A is correct.