A change in the interest rate does not affect the quantity of money supplied.This means that:
A)the money supply curve is negatively sloped.
B)the money supply curve is vertical.
C)the money supply curve is horizontal.
D)the money supply curve is a 45 degree line drawn from the origin.
E)the money supply curve is kinked.

Question

Quizplus · Accepted Answer

In the short term, the quantity of money supplied is determined by the central bank, and changes in the interest rate do not affect the willingness of the central bank to supply money. Therefore, the money supply curve is considered to be vertical, indicating that the quantity of money supplied remains the same regardless of changes in the interest rate.

A Change in the Interest Rate Does Not Affect the Quantity