Use the following to answer questions:
-(Figure: Money Market I)Refer to Figure: Money Market I.If the money market is initially in equilibrium at point E and the central bank sells Treasury bills,then the interest rate will:

Question

Use the following to answer questions: 
-(Figure: Money Market I)Refer to Figure: Money Market I.If the money market is initially in equilibrium at point E and the central bank sells Treasury bills,then the interest rate will:

Quizplus · Accepted Answer

When the central bank sells Treasury bills, it decreases the money supply, leading to an increase in the interest rate, moving it towards i_H.

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