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K In the figure to the right, when the money supply increased from MS, to MS2, the equilibrium interest rate fell from 4% to 3%. Why? 7- OA. The Fed was selling securities so rates were falling. OB. The Fed was pursuing contractionary policies. OC. Demand for money was increasing. OD. The Fed was buying securities in pursuit of expansionary monetary policies. 6- Interest rate, i (%) MS₁ MS2 G 5- A 4- 3- 2- 1- 0+ 800 850 B MD 900 950 1,000 1,050 1,100 Quantity of Money, M ($billions)

K In the figure to the right, when the money supply increased from MS, to MS2, the equilibrium interest rate fell from 4% to 3%. Why? 7- OA. The Fed was selling securities so rates were falling. OB. The Fed was pursuing contractionary policies. OC. Demand for money was increasing. OD. The Fed was buying securities in pursuit of expansionary monetary policies. 6- Interest rate, i (%) MS₁ MS2 G 5- A 4- 3- 2- 1- 0+ 800 850 B MD 900 950 1,000 1,050 1,100 Quantity of Money, M ($billions)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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K In the figure to the right, when the money supply increased from MS, to MS2, the equilibrium interest rate fell from 4% to 3%. Why? 7- OA. The Fed was selling securities so rates were falling. OB. The Fed was pursuing contractionary policies. OC. Demand for money was increasing. OD. The Fed was buying securities in pursuit of expansionary monetary policies. 6- Interest rate, i (%) MS₁ MS2 G 5- A 4- 3- 2- 1- 0+ 800 850 B MD 900 950 1,000 1,050 1,100 Quantity of Money, M ($billions)
Transcribed Image Text:K In the figure to the right, when the money supply increased from MS, to MS2, the equilibrium interest rate fell from 4% to 3%. Why? 7- OA. The Fed was selling securities so rates were falling. OB. The Fed was pursuing contractionary policies. OC. Demand for money was increasing. OD. The Fed was buying securities in pursuit of expansionary monetary policies. 6- Interest rate, i (%) MS₁ MS2 G 5- A 4- 3- 2- 1- 0+ 800 850 B MD 900 950 1,000 1,050 1,100 Quantity of Money, M ($billions)
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