Exhibit 15-6 -If the Fed Is Targeting the Money Supply and the Supply

question 106

Multiple Choice

Exhibit 15-6
-If the Fed is targeting the money supply and the money demand shifts from D_m to D_m' in Exhibit 15-6,the Fed will

• A)do nothing and the interest rate will rise to i'
• B)do nothing and the interest rate will settle at i
• C)decrease the money supply to restore its target of i
• D)increase the money supply to restore its target of i
• E)decrease money demand back to D_m to restore its target of i

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