When the Demand for Money Is Shown on a Graph

question 92

Multiple Choice

When the demand for money is shown on a graph, which variable is on the vertical axis and which variable is on the horizontal axis?  

• A) Quantity of money is on the vertical axis, and interest rate is on the horizontal axis. 
• B) Interest rate is on the vertical axis, and quantity of money is on the horizontal axis. 
• C) Price level is on the vertical axis, and quantity of money is on the horizontal axis. 
• D) Quantity of money is on the vertical axis, and price level is on the horizontal axis.

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Definitions:

AVC

Average Variable Cost, calculated by dividing total variable costs by the quantity of output produced.

Short-Run Cost Curve

A curve that shows how production costs change as output is increased or decreased, assuming some inputs are fixed.

Profit Maximizing

The process of adjusting production and sale strategies to achieve the maximum possible profit.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products sold by all firms, no barriers to entry or exit, and perfect information among buyers and sellers.