Narrbegin Exhibit 15.1 Money market demand and supply curves
-Starting from an equilibrium at E₁ in Exhibit 15.1, a leftward shift of the money supply curve from MS₁ to MS₂ would cause an excess:

Question

Narrbegin Exhibit 15.1 Money market demand and supply curves

-Starting from an equilibrium at E₁ in Exhibit 15.1, a leftward shift of the money supply curve from MS₁ to MS₂ would cause an excess:

Quizplus · Accepted Answer

A leftward shift in the money supply curve means that there is a decrease in the supply of money, leading to an increase in the interest rate. As a result, people would want to hold less money and more bonds, causing an excess demand for money and leading people to sell bonds.