The following graph shows the marginal cost (MC) and marginal benefit (MB) of holding real money balances. The market is initially in equilibrium at £100. Refer to the graph to answer the question. 
Suppose the interest rate on bonds increases. Other things remaining the same, which of the following is true?
Definitions:
Welfare State
A social system in which the government takes responsibility for the welfare of its citizens, providing services such as healthcare, education, and financial support.
Robert Mcnamara
A prominent figure in U.S. history who served as the Secretary of Defense during the Vietnam War and later as the President of the World Bank.
Vietnam War
A prolonged conflict from 1955 to 1975 between communist forces in North Vietnam, backed by its communist allies, and the government of South Vietnam, supported by the United States and other anti-communist nations.
War Powers Act
Law passed in 1973, reflecting growing opposition to American involvement in the Vietnam War; required congressional approval before the president sent troops abroad.
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