Handout 9.1: Interest Rates Interpret the following graph showing the potential changes in supply of money compared to the demand for money. The demand for money is represented by line MD and the initial supply of money is represented by line MS. Then answer the questions below. Change in IÇerest Rates Interest Rate MS1 MS MS2 Font 7 A B 4 MD .7 .8 .9 1 1.1 1.2 1.3 Quantity of money Find the new equilibrium points Use the graph to explain why changes in the supply of money affect the quantity of money demanded 3.
Handout 9.1: Interest Rates Interpret the following graph showing the potential changes in supply of money compared to the demand for money. The demand for money is represented by line MD and the initial supply of money is represented by line MS. Then answer the questions below. Change in IÇerest Rates Interest Rate MS1 MS MS2 Font 7 A B 4 MD .7 .8 .9 1 1.1 1.2 1.3 Quantity of money Find the new equilibrium points Use the graph to explain why changes in the supply of money affect the quantity of money demanded 3.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Use the graph to explain why changes in the supply of money affect the quantity of money demanded.
Transcribed Image Text:Handout 9.1: Interest Rates
Interpret the following graph showing the potential changes in supply of money
compared to the demand for money. The demand for money is represented by line
MD and the initial supply of money is represented by line MS. Then answer the
questions below.
Change in Ierest Rates
Interest Rate
MS1
MS
MS2
Font
7
A
5
B
4
MD
.7
.8
.9
1
1.1
1.2
1.3
Quantity of money
Find the new equilibrium points
Use the graph to explain why changes in the supply of money affect the quantity of money
demanded
to
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