Figure 16-4

question 397

Multiple Choice

Figure 16-4. On the figure, MS represents money supply and MD represents money demand.

-Refer to Figure 16-4. Suppose the money-demand curve is currently MD₁. If the current interest rate is r₂, then

• A) the quantity of money that people want to hold is less than the quantity of money that the Federal Reserve has supplied.
• B) people will respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts.
• C) bond issuers and banks will respond by raising the interest rates they offer.
• D) in response, the money-demand curve will shift upward from its current position to establish equilibrium in the money market.

---

Definitions:

Sodium Hydrogen Carbonate

A chemical compound also known as baking soda, with formula NaHCO3, often used in cooking, cleaning, and neutralizing acids.

Sodium Carbonate

A white, water-soluble salt used widely in manufacturing glass, soaps, and detergents, and as a water softener.

Multiple Proportions

A law stating that when elements combine, they do so in ratios of small whole numbers (part of the foundation of stoichiometry).

Multiple Proportions

This is a law stating that when two elements combine to form more than one compound, the masses of one element that combine with a fixed mass of the other are in a ratio of small whole numbers.