When a graph of the money market is drawn with the value of money on the vertical axis, long-run equilibrium is obtained when the quantity demanded and quantity supplied of money are equal. This is due to adjustments in which of the following?
A) the value of money
B) real interest rates
C) nominal interest rates
D) the money supply

Question

Quizplus · Accepted Answer

The value of money adjusts to ensure that the quantity demanded and quantity supplied of money are equal, achieving long-run equilibrium in the money market. This adjustment reflects changes in prices and purchasing power, not direct manipulations of interest rates or the money supply.

When a Graph of the Money Market Is Drawn with the Value