Question

Figure 30-1 Value of Money MSI MS2 ----VAJB Money Demand Quantity of Money Refer to Figure 30-1. If the current money supply is MS1, then Select one: a. equilibrium exists when the equilibrium is at point D. b. equilibrium exists when the value of money is 2. C. equilibrium exists when the value of money is 1. O d. there is excess demand if the value of money is 2.

Answer 1

a) "B"

Equilibrium exists when the value of money is 2.

b) "B"

It willl decrease the value of money and increase the equilibrium quantity.

c) "D"

it will only affect the nominal value like price but not the real variable like unemployment.

d) "A

When they buy bonds and reseve ratio is less then the money supply will increase the most.