2. The theory of liquidity preference and the downward-sloping aggregate-demand curve The following graph shows the money market in a hypothetical economy. Assume that the central bank fixes the quantity of money supplied. Suppose the price level increases from 90 to 105. Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money. (? 18 INTEREST RATE (Percent) Money Supply Money Demand Money Demand Money Supply Q Search A 11 ST #

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Chapter34: The Influence Of Monetary And Fiscal Policy On Aggregate Demand
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2. The theory of liquidity preference and the downward-sloping aggregate-demand curve
The following graph shows the money market in a hypothetical economy. Assume that the central bank fixes the quantity of money supplied.
Suppose the price level increases from 90 to 105.
Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money.
?
INTEREST RATE (Percent)
Average/4
18
15
1-3°C
Cloudy
Money Supply
Money Demand
Money Demand
1
Money Supply
T
Q Search
2016
W
acer
Transcribed Image Text:Attempts 2. The theory of liquidity preference and the downward-sloping aggregate-demand curve The following graph shows the money market in a hypothetical economy. Assume that the central bank fixes the quantity of money supplied. Suppose the price level increases from 90 to 105. Shift the appropriate curve on the graph to show the impact of an increase in the overall price level on the market for money. ? INTEREST RATE (Percent) Average/4 18 15 1-3°C Cloudy Money Supply Money Demand Money Demand 1 Money Supply T Q Search 2016 W acer
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