Asked by Melissa Brown on Apr 29, 2024
Verified
Refer to Figure 30-1. When the money supply curve shifts from MS1 to MS2,
A) the equilibrium value of money decreases.
B) the equilibrium price level decreases.
C) the supply of money has decreased.
D) the demand for goods and services will decrease.
Money Supply Curve
A graphical representation showing the relationship between the quantity of money in the economy and the interest rate.
Equilibrium Value
The point at which the quantity demanded by consumers matches the quantity supplied by producers, achieving a market balance.
- Identify the effects of shifts in the money supply curve on equilibrium value, price levels, and money demand.
Verified Answer
KA
Kaycee AlanisApr 30, 2024
Final Answer :
A
Explanation :
When the money supply curve shifts to the right (from MS1 to MS2), it indicates an increase in the money supply. This typically leads to a decrease in the value of money because more money is chasing the same amount of goods and services, potentially leading to inflation.
Learning Objectives
- Identify the effects of shifts in the money supply curve on equilibrium value, price levels, and money demand.