Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.

-Refer to Figure 16-2. Which of the following quantities is held constant as we move from one point to another on either graph?
A) the nominal interest rate
B) the quantity of money demanded
C) investment
D) the expected rate of inflation

Question

Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.
 
-Refer to Figure 16-2. Which of the following quantities is held constant as we move from one point to another on either graph?
A) the nominal interest rate 
B) the quantity of money demanded 
C) investment 
D) the expected rate of inflation

Quizplus · Accepted Answer

The expected rate of inflation is typically held constant when analyzing shifts or movements along a graph in economic models, as it is an external factor not directly affected by the variables within the graph.