Figure 34-4.On the figure,MS represents money supply and MD represents money demand. -Refer to Figure 34-4.Which of the following events could explain a decrease in the equilibrium interest rate from r₁ to r₃? A)a decrease in the price level B)a decrease in the number of firms building new factories and buying new equipment C)an increase in the price level D)an increase in the number of firms building new factories and buying new equipment

Question

Quizplus · Accepted Answer

A decrease in the price level would increase the real money supply, leading to a lower equilibrium interest rate.