Based on the figure above, which of the following factors could ...

[melly21297]

Based on the figure above, which of the following factors could lead the supply curve to shift rightward from S0 to S2?
 
  A) a fall in foreign interest rates
  B) a fall in the U.S. interest rate
  C) a rise in the U.S. exchange rate
  D) a fall in the U.S. exchange rate
  E) a rise in expected future U.S. exchange rate

Question 2

Suppose in the money market the equilibrium nominal interest rate is 5 percent. If the Fed increases the quantity of money, what is the effect on the nominal interest rate?
 
  What will be an ideal response?

[Melissahxx]

Answer to Question 1

B

Answer to Question 2

If the Fed increases the quantity of money, the supply of money curve shifts rightward and the nominal interest rate falls.