When the money market is drawn with the value of money on the vertical axis,long-run equilibrium is obtained when the quantity demanded and quantity supplied of money are equal due to adjustments in
A)nominal interest rates.
B)real interest rates.
C)the price level.
D)the money supply.

Question

Quizplus · Accepted Answer

In the long run, the quantity demanded and supplied of money will adjust to be equal at a certain price level. This means that the equilibrium value of the money market is determined by the price level and not influenced by changes in nominal or real interest rates or the money supply. Therefore, the correct choice is C - the price level.

When the Money Market Is Drawn with the Value of Money