When the Money Market Is Drawn with the Value of Money

question 75

Multiple Choice

When the money market is drawn with the value of money on the vertical axis,if money supply and money demand both shift to the right

• A)the price level must have risen
• B)the price level must have fallen.
• C)the price level rises if money supply shifts farther than money demand.
• D)the price level falls if money supply shifts farther than money demand.

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Definitions:

Consumers' Incomes

The total amount of income earned by consumers, influencing their ability to purchase goods and services.

Normal Good

A type of good for which demand increases as the income of the consumer increases, indicating a direct relationship between income and demand.

Yield to Call

The return an investor would receive if a callable bond is held until the issuer exercises their option to redeem it before its maturity date.

Current Yield

The annual interest payment of a bond divided by its current market price, used to compare the return on investment of different bonds.