Figure 15-3
-Refer to Figure 15-3.In the figure above,when the money supply shifts from MS1 to MS2,at the interest rate of 3 percent households and firms will
A)buy Treasury bills.
B)sell Treasury bills.
C)neither buy nor sell Treasury bills.
D)want to hold more money.

Question

Figure 15-3 
-Refer to Figure 15-3.In the figure above,when the money supply shifts from MS1 to MS2,at the interest rate of 3 percent households and firms will
A)buy Treasury bills. 
B)sell Treasury bills. 
C)neither buy nor sell Treasury bills. 
D)want to hold more money.

Quizplus · Accepted Answer

When the money supply increases, the interest rate falls. At a lower interest rate, households and firms will want to hold more money, so they will buy Treasury bills.

Figure 15-3 -Refer to Figure 15-3.In the Figure Above,when the Money Supply