Refer to the graph below,in which Dt is the transactions demand for money,Dm is the total demand for money,and Sm is the supply of money.If the market for money is in equilibrium at a 6 percent rate of interest and the money supply increases,then Sm2 will shift to:
A) Sm3 and the interest rate will be 4 percent.
B) Sm3 and the interest rate will be 8 percent.
C) Sm1 and the interest rate will be 8 percent.
D) Sm1 and the interest rate will be 4 percent.
Correct Answer:
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