Figure 34-2

question 6

Multiple Choice

Figure 34-2. 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 34-2. 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.

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Definitions:

Water

A clear, smell-free, flavorless fluid that constitutes the oceans, lakes, streams, and precipitation, and is foundational to the bodily fluids of living beings.

Price/Earnings Ratio

A valuation metric measuring a company's current share price relative to its per-share earnings, used to evaluate if a stock is over or under-valued.

Net Income

The profit of a company after all operating expenses, taxes, and interest are subtracted from total revenue.