Refer to the Graph

question 36

Multiple Choice

Refer to the graph. If the initial equilibrium interest rate was 5 percent and the money supply increased by $100 billion, then the new interest rate would be

• A) 1 percent.
• B) 2 percent.
• C) 3 percent.
• D) 4 percent.

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Definitions:

Marginal Revenue

The increase in income from the sale of one extra unit of a good or service.

Marginal Revenue

The additional income from selling one more unit of a good; sometimes equals the price of the good.

Marginal Cost

The additional cost incurred from manufacturing or producing one more unit of a specific product or service.

Profit Maximizing

A financial strategy or goal of businesses to achieve the highest possible profit, where marginal revenue equals marginal cost.