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-(Figure: Short-Run Determination of the Interest Rate) Refer to Figure: Short-Run Determination of the Interest Rate.If the money supply is at MS₂ and the central bank sells Treasury bills,then in the short run the interest rate will:

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-(Figure: Short-Run Determination of the Interest Rate) Refer to Figure: Short-Run Determination of the Interest Rate.If the money supply is at MS₂ and the central bank sells Treasury bills,then in the short run the interest rate will:

Quizplus · Accepted Answer

According to the graph, if the money supply decreases from MS₂ to MS₁ due to the central bank's sale of Treasury bills, the equilibrium interest rate will increase from i₂ to i₁. Therefore, the correct answer is option C.

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