Based on the model of the money market, if prices in the economy decrease, the equilibrium interest rate should
A) stay the same.
B) increase.
C) decrease.
D) increase to the same extent that the supply of money increases.
Question 2
A change in the price of a good ________ its supply curve and ________ a movement along its supply curve.
A) does not shift; causes
B) shifts; does not cause
C) does not shift; does not cause
D) shifts; causes
E) None of the above because the change in the price might cause either a shift in the supply curve or a movement along the supply curve depending on the size of the change.
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