Refer to the graph above, in which Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. The market is initially in equilibrium at a 6 percent interest rate. If the money supply increases, then Sm2 will shift to:
Definitions:
Equilibrium Price
The monetary value at which the supply and demand of products in the market achieve parity.
Tax On Buyers
A burden placed on buyers in the form of a tax on the goods or services they purchase, decreasing their willingness to buy at higher prices.
Smart Watch Market
The sector within the technology industry concerned with the development, production, and sale of smartwatches, wearable devices that offer various computing and telecommunications capabilities.
Effective Price
The actual price that is paid for a product or service after accounting for discounts, subsidies, or taxes.
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