Figure 17-2
-Refer to Figure 17-2.In the figure above,when the money supply shifts from MS₁ to MS₂,at the interest rate of 3 percent households and firms will

Question

Figure 17-2 -Refer to Figure 17-2.In the figure above,when the money supply shifts from MS₁ to MS₂,at the interest rate of 3 percent households and firms will

Quizplus · Accepted Answer

When the money supply increases from MS1 to MS2, the interest rate falls below 3 percent. At an interest rate of 3 percent, households and firms will find it more attractive to hold money rather than Treasury bills, leading them to sell Treasury bills to hold more money.

Figure 17-2 -Refer to Figure 17-2.In the Figure Above,when the Money Supply