Use the figure below for the following questions. Figure 30-1 -Refer to Figure 30-1. If the current money supply is located at MS₁ and the value of money is 2, what is the excess demand or supply? A)There is no excess supply or excess demand. B)There is an excess demand. C)There is an excess supply. D)There is both an excess demand and an excess supply.

Question

Quizplus · Accepted Answer

At point MS₁, the money supply intersects the value of money at 2. This intersection also intersects the aggregate demand curve and the short-run aggregate supply curve. Therefore, there is no excess supply or excess demand at this point.

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