Author Question: Suppose that the current money market equilibrium features an interest rate of 5 percent and a ... (Read 57 times)

eruditmonkey@yahoo.com · **on:** Jun 30, 2018

Suppose that the current money market equilibrium features an interest rate of 5 percent and a quantity of 2 trillion. If the Fed raises the discount rate, which of the following ismostlikely to be the new money market equilibrium?
a. An interest rate of 6 percent and a quantity of 1.5 trillion.
b. An interest rate of 5 percent and a quantity of 2 trillion.
c. An interest rate of 4 percent and a quantity of 2.5 trillion.
d. None of the above.

Question 2

An increase in the per unit costs of production within an economy will cause the aggregate supply curve to shift to the right.
a. True
b. False
Indicate whether the statement is true or false