When the money market is drawn with the value of money on the vertical axis,an increase in the money supply shifts the money supply curve to the
A)right,lowering the price level.
B)right,raising the price level.
C)left,raising the price level.
D)left,lowering the price level.

Question

Quizplus · Accepted Answer

In the money market, the value of money is represented on the vertical axis and the quantity of money is represented on the horizontal axis. An increase in the money supply will shift the supply curve to the right, indicating that there is now more money available at each price level. This will lead to an increase in the quantity of money demanded and a decrease in the value of money, which is represented by an increase in the price level. Therefore, the correct answer is B, a rightward shift in the money supply curve will lead to an increase in the price level.

When the Money Market Is Drawn with the Value of Money