When the Money Market Is Depicted in a Diagram with the Value

question 123

Multiple Choice

When the money market is depicted in a diagram with the value of money on the vertical axis, which of the following best describes the effects of an increase in money supply?

• A)It creates an excess supply of money, causing people to spend more.
• B)It creates an excess supply of money, causing people to spend less.
• C)It creates an excess demand for money, causing people to spend more.
• D)It creates an excess demand for money, causing people to spend less.

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Definitions:

Group Membership

The state of being part of a collective or organization with shared interests or goals, emphasizing belonging and identity.

Homogamy

The practice or tendency for individuals to marry others who share similar characteristics, such as socio-economic status, values, or ethnicity.

Open System

A social system with ample opportunities to move from one class to another.

Closed System

A physical system that does not allow certain types of transfers (such as transfer of mass) in or out of the system.