When the money market is drawn with the value of money on the vertical axis,a decrease in the money supply leads people to
A)spend more so the value of a dollar rises.
B)spend more so the value of a dollar falls.
C)spend less so the value of a dollar rises.
D)spend less so the value of a dollar falls.

Question

Quizplus · Accepted Answer

When the money supply decreases, people will have less money to spend, leading them to spend less. This will cause a decrease in aggregate demand and a decrease in prices. Thus, the value of a dollar will rise.

When the Money Market Is Drawn with the Value of Money