Refer to the information provided in Figure 11.3 below to answer the questions that follow.
Figure 11.3
-Refer to Figure 11.3.An increase in nominal aggregate output,ceteris paribus,will likely

Question

Refer to the information provided in Figure 11.3 below to answer the questions that follow.
  Figure 11.3
-Refer to Figure 11.3.An increase in nominal aggregate output,ceteris paribus,will likely

Quizplus · Accepted Answer

According to the figure, an increase in nominal aggregate output (shift from OA to OB) leads to an increase in the demand for money (shift from Md1 to Md2). This puts upward pressure on the interest rate. Therefore, the equilibrium interest rate increases without any change in equilibrium money holdings. Hence, the best choice is C.

Refer to the Information Provided in Figure 11