Figure 116 Alt Text for Figure 11

question 201

Multiple Choice

Figure 11.6 Alt text for Figure 11.6: In figure 11.6, a graph shows movement in the money market.
Long description for Figure 11.6: The x-axis is labelled, quantity of money, M (billions of dollars) , with values 900 and 950 marked.The y-axis is labelled, interest rate, i, with values 3 and 4% marked.3 lines are shown; MS1, MS2, and MD.Line MD begins in the top left corner and slopes down to the end of the x-axis.Line MS1 is perpendicular to the x-axis, and begins from the value 950.Line MS2 is perpendicular to the x-axis, and begins from the value 900, to the left of line MS1.Line MD intersects line MS1 at point A (950, 3) , approximately 3 quarters of the way along both lines.Line MD meets line MS2 at point B (900, 4%) , more than half way along both lines.These points of intersection are connected to their respective coordinates on the y-axis using dotted lines.
-Refer to Figure 11.6.In the figure above, the movement from point A to point B in the money market would be caused by

• A)an increase in the price level.
• B)a decrease in real GDP.
• C)an open market sale of Canada bonds by the Bank of Canada.
• D)a decrease in the desired reserve ratio by commercial banks.
• E)an increase in the willingness of commercial banks to make risky loans.

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