Suppose that money demand is given by the function MD=55+P, and the Bank of Canada maintains the supply of money at MS=$58b. If the Bank of Canada suddenly increases the money supply to MS'-$60b, what has happened to equilibrium value of money? It has decreased from 5 to 2 MD will shift, and the value of money will remain unchanged It has increased from 3 to 5 It has decreased from 1/3 to 1/5
Suppose that money demand is given by the function MD=55+P, and the Bank of Canada maintains the supply of money at MS=$58b. If the Bank of Canada suddenly increases the money supply to MS'-$60b, what has happened to equilibrium value of money? It has decreased from 5 to 2 MD will shift, and the value of money will remain unchanged It has increased from 3 to 5 It has decreased from 1/3 to 1/5
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Transcribed Image Text:Suppose that money demand is given by the function MD=55+P, and the Bank of Canada maintains the supply of
money at MS=$58b. If the Bank of Canada suddenly increases the money supply to MS'-$60b, what has happened to
equilibrium value of money?
It has decreased from 5 to 2
MD will shift, and the value of money will remain unchanged
It has increased from 3 to 5
It has decreased from 1/3 to 1/5
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