Please help with this. Use the graph below to answer the next 2 question (n)in t
ID: 1125310 • Letter: P
Question
Please help with this.
Use the graph below to answer the next 2 question (n)in the money supply from S D emand for Money Quantity of Money to S: would have a tendency to sensitive to changes in the interest rate. the amount of investment, assuming investment is a. decrease; raise b. decrease; lower c. increase; raise d. increase; lower If the interest rate is ii and the relevant money supply curve is S2, then there is a a. shortage of money between points B and A. b. surplus of money between points B and A. c. surplus of money between points C and D d. shortage of money between points C and D. 6. According to the Keynesian transmission mechanism, an increase in the money supply will 7. the interest rate, causing a in investment, which then Real GDP a. The interest rate rises; this in turn reduces investment spending, which in turn raises b. The interest rate falls; this in turn stimulates investment spending, which in turn raises c. The interest rate falls; this in turn stimulates investment spending, which in turn raises d. The interest rate falls; this in turn stimulates investment spending, which in turn total expenditures and shifts the AD curve rightward. total expenditures and shifts the AD curve leftward. total expenditures and shifts the AD curve rightward. lowers total expenditures and shifts the AD curve leftward.Explanation / Answer
Ans)
5.
d. increase; lower
A shift in the money supply from S1 to S2 will decrease the interest rate.
6.
b. a surplus of money between points B and A.
7.
c.The interest falls; this, in turn, stimulates investment spending, which in turn raises total expenditure and shifts the AD curve rightward.
according to the Keynesian transmission mechanism, an increase in the money supply will lower the interest rate, causing a rise in investment, which then raises Real GDP.