The Graph Shown Displays the Relationship Between Money and the Interest

question 96

Multiple Choice

The graph shown displays the relationship between money and the interest rate. If the money supply in the economy is currently at M^S3, to engage in expansionary policy the Fed would use open market operations to move the money supply to which point?

• A) M ^S1
• B) M ^S2
• C) M ^S4
• D) The money supply would remain at M ^S3.

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