Figure 1, Money Supply and Money DemandMoneySupply.MS,MoneySupply.MSValue ofmoney, 1/P1/P11/P2MDQuantity of Money, M(billions of dollars)S900S950Ceteris paribus, if the Fed increases the money supply from MS1 to MS2, as indicated in the diagram above, it follows that,in the short run, there will bepressure on the price level, andpressure on nominal interest rates.Select one:O a. upward; upwardO b. downward; upwardO c. upward, downwardO d. downward; downward

The monetary policy tool is in hand of central bank helps to regulate the economy when it is needed.…

Answered: money supply fr

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Economics

money supply fr

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 8E

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Question

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Figure 1, Money Supply and Money Demand
Money
Supply.
MS,
Money
Supply.
MS
Value of
money, 1/P
1/P1
1/P2
MD
Quantity of Money, M
(billions of dollars)
S900
S950
Ceteris paribus, if the Fed increases the money supply from MS1 to MS2, as indicated in the diagram above, it follows that,
in the short run, there will be
pressure on the price level, and
pressure on nominal interest rates.
Select one:
O a. upward; upward
O b. downward; upward
O c. upward, downward
O d. downward; downward

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