Question

When the money supply curve shifts from ms1 to ms2,

a. the supply of money has decreased.
b. the equilibrium value of money decreases.
c. the demand for goods and services will decrease.
d. the equilibrium price level decreases?

Answer 1

The correct option is B.
The supply of money in an economy is determined by the federal government.
The supply curve for money is a vertical line and money market equilibrium always occur at the interest rate where the quantity of money demanded is equal to the quantity of money supplied. A shift in the curve is usually caused by changes in the quantity of money demanded.