Use the Following to Answer Questions

question 223

Multiple Choice

Use the following to answer questions:
Figure: Short-Run Determination of the Interest Rate
-(Figure: Short-Run Determination of the Interest Rate) Look at the figure Short-Run Determination of the Interest Rate. If the money supply is at MS₁ and the central bank buys Treasury bills, then the resulting short-run shift in the supply of savings (loanable funds) may be represented by a shift of the:

• A)money supply curve to MS₂, which raises the interest rate.
• B)supply of loanable funds from S₁ to S₂, which lowers the interest rate.
• C)supply of loanable funds from S₂ to S₁, which raises the interest rate.
• D)interest rate from r₂ to r₁.

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Definitions:

Marginal Product

The additional output generated by employing one more unit of a particular input, holding all other inputs constant.

Market Comparison

The analysis and evaluation of a company's performance, products, or services against those of its competitors within the same industry or market.

Marginal Product

The additional output produced by employing one more unit of a specific factor of production, keeping other inputs constant.

Equilibrium Quantity

The level of output at which the quantity supplied equals the quantity demanded, reflecting a market balance between sellers and buyers.