-In the above figure, if the interest rate is 8 per cent per year, the quantity of money demanded is
A) greater than the quantity of money supplied, and the demand curve for money will shift.
B) less than the quantity of money supplied, and the interest rate will change.
C) greater than the quantity of money supplied, and the supply curve of money will shift.
D) less than the quantity of money supplied, and the demand curve for money will shift.
E) greater than the quantity of money supplied, and the interest rate will change.

Question

-In the above figure, if the interest rate is 8 per cent per year, the quantity of money demanded is
A) greater than the quantity of money supplied, and the demand curve for money will shift. 
B) less than the quantity of money supplied, and the interest rate will change. 
C) greater than the quantity of money supplied, and the supply curve of money will shift. 
D) less than the quantity of money supplied, and the demand curve for money will shift. 
E) greater than the quantity of money supplied, and the interest rate will change.

Quizplus · Accepted Answer

When the quantity of money demanded is less than the quantity of money supplied at a given interest rate, the interest rate will adjust to reach equilibrium, rather than the demand or supply curves shifting.

-In the Above Figure, If the Interest Rate Is 8