Figure 34-4. On the figure, MS represents money supply and MD represents money demand.
-Refer to Figure 34-4. Suppose the money-demand curve is currently MD2. If the current interest rate is r2, then
A) in response, the money-demand curve will shift rightward from its current position to establish equilibrium in the money market.
B) people will respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts.
C) bond issuers and banks will respond by lowering the interest rates they offer.
D) there is a shortage of money.

Question

Figure 34-4. On the figure, MS represents money supply and MD represents money demand. 
-Refer to Figure 34-4. Suppose the money-demand curve is currently MD2. If the current interest rate is r2, then
A) in response, the money-demand curve will shift rightward from its current position to establish equilibrium in the money market. 
B) people will respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts. 
C) bond issuers and banks will respond by lowering the interest rates they offer. 
D) there is a shortage of money.

Quizplus · Accepted Answer

The Answer of Figure 34-4. On the figure, MS represents money supply and MD represents money demand. 
-Refer to Figure 34-4. Suppose the money-demand curve is currently MD2. If the current interest rate is r2, then
A) in response, the money-demand curve will shift rightward from its current position to establish equilibrium in the money market. 
B) people will respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts. 
C) bond issuers and banks will respond by lowering the interest rates they offer. 
D) there is a shortage of money.