Refer to the information provided in Figure 11.5 below to answer the questions that follow.
Figure 11.5
-Refer to Figure 11.5.If the money supply increases from to ,

Question

Refer to the information provided in Figure 11.5 below to answer the questions that follow.
  Figure 11.5
-Refer to Figure 11.5.If the money supply increases from to ,

Quizplus · Accepted Answer

According to the graph, an increase in money supply (MS1 to MS2) leads to a decrease in the interest rate (from 6% to 4%) in order to bring the money market back to equilibrium. Therefore, the correct answer is B - the interest rate will decrease to 4%.

Refer to the Information Provided in Figure 11