The following graph shows the money market in equilibrium at an interest rate of 3% and a quantity of money equal to $15 billion. Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. 6 Money Supply 5 Money Demand Money Supply Money Demand 1 5 10 15 20 25 30 MONEY (Billions of dollars) INTEREST RATE

The following graph shows the money market in equilibrium at an interest rate of 3% and a quantity of money equal to $15 billion. Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. 6 Money Supply 5 Money Demand Money Supply Money Demand 1 5 10 15 20 25 30 MONEY (Billions of dollars) INTEREST RATE

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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