Narrbegin Exhibit 15.1 Money market demand and supply curves
-As shown in Exhibit 15.1, assume the money supply curve shifts leftward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

Question

Narrbegin Exhibit 15.1 Money market demand and supply curves

-As shown in Exhibit 15.1, assume the money supply curve shifts leftward from MS₁ to MS₂ and the economy is operating along the intermediate segment of the aggregate supply curve. The result will be a:

Quizplus · Accepted Answer

When the money supply shifts leftward, interest rates will rise, causing a decrease in investment. As a result, both real GDP and the price level will decrease, assuming the economy is operating along the intermediate segment of the aggregate supply curve. Therefore, the best choice is B (lower investment, lower real GDP and lower price level).