Krugman's Economics For The Ap® Course
Krugman's Economics For The Ap® Course
3rd Edition
ISBN: 9781319113278
Author: David Anderson, Margaret Ray
Publisher: Worth Publishers
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Chapter 31, Problem 1CYU
To determine

To draw: Graph showing increase in money demand at every interest rate impacting equilibrium rate due to money supply.

Expert Solution & Answer
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Explanation of Solution

In the given graph, the demand is increasing which is shown by the right shift of the demand curve at an increased interest rate i.e. i1 . The new equilibrium will be at the point where MD1 and MS curves are intersecting.

  Krugman's Economics For The Ap® Course, Chapter 31, Problem 1CYU

Graph 1

Economics Concept Introduction

Money supply curve: The money supply curve refers to the curve that depicts the relationship between money supplied and the interest rate that prevails in the market.

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