Figure 16-2

question 224

Multiple Choice

Figure 16-2. On the left-hand graph, MS represents the supply of money and MD represents the demand for money; on the right-hand graph, AD represents aggregate demand. The usual quantities are measured along the axes of both graphs.

-Refer to Figure 16-2. Assume the money market is always in equilibrium. Under the assumptions of the model,

• A) the quantity of goods and services demanded is higher at P₂ than it is at P₁.
• B) the quantity of money is higher at Y₁ than it is at Y₂.
• C) an increase in r from r₁ to r₂ is associated with a decrease in Y from Y₁ to Y₂.
• D) All of the above are correct.

---

Definitions:

Replicated

The process of conducting an experiment or study again to confirm the results of the original study.

Falsified

Intentionally altered or manipulated information, data, or documents with the intent to deceive or mislead.

Clever Hans

A famous case study in early 20th century psychology of a horse that was claimed to have been able to perform arithmetic and other intellectual tasks.

Arithmetic

A branch of mathematics dealing with the properties and manipulation of numbers, including operations such as addition, subtraction, multiplication, and division.