Interest rate versus quantity of money

Assignment Help Business Economics

Reference no: EM133637366

Question

Figure 35-1 A graph of Interest Rate versus Quantity of Money shows a straight line, Money Demand, decreasing linearly, and a vertical line, M S, extending from the horizontal axis. 3 horizontal lines extend from the vertical axis from the following values, from highest to lowest. 4%, 3%, and 2%. The 4% line passes through Money Demand at point a, to the left of M S, and touches M S at point b, above the intersection of Money Demand and M S. The 3% line touches the intersection of Money Demand and M S at point c. The 2% line passes through M S below the intersection of Money Demand and M S, and touches Money Demand at point d, to the right of M S. Refer to Figure 35-1. If the current interest rate is 2 percent,

1. there is an excess supply of money.

2. people will sell more bonds, which drives interest rates up.

3. as the money market moves to equilibrium, people will buy more goods. d. the quantity of money supplied is greater than the quantity of money demanded.

Reference no: EM133637366

Questions Cloud

What is the best way to describe this new order : Bush took the office of president in 1989 having to face a "new world order," unseen by his predecessors. What is the best way to describe this new order

Affect nuclear energy market and effect on price-quantity : Explain how this would affect the nuclear energy market and the effect on price and quantity.

How did the united states use the media : How did the United States use the media to create support necessary for the War? To what extent did this use of media influence American views of the Germans

Republican policy consists of providing tax cuts : Identify the fallacy in argument: Republican policy consists of providing tax cuts for the wealthy and opposing any policy action favored by the Democrats

Interest rate versus quantity of money : Figure 35-1 A graph of Interest Rate versus Quantity of Money shows a straight line, Money Demand, decreasing linearly, and a vertical line,

What were the leadership characteristics : What were the leadership characteristics which allowed Ludwick Marishane to be successful in the development of Dry Bath

How does the authors use of a gender or sexuality lens : How does the authors use of a gender or sexuality lens added new insights that would not have been highlighted from the perspective of other, more traditional

Find the total cost function : Find the total cost function. Plot it for quantities up to 10. Derive the firm's supply correspondence for the output good as a function of the output price p.

What is the style of the image the rise of christianity : What is the style of the image "the rise of christianity in the roman empire, unknown artist, 15th century" What does the image say about the time period

User Account

All Pages