?

AP® Macroeconomics

Free Version

Upgrade subject to access all content

Moderate

Money Market Change Effects on Nominal Interest Rate

APMACR-J2BHW1

If the Federal Reserve sells bonds on the open market, what effects will this policy have on the money market graph and the equilibrium nominal interest rate?

A

The money supply curve will shift left, the money demand curve will not shift, and the equilibrium nominal interest rate will increase.

B

The money supply curve will shift right, the money demand curve will not shift, and the equilibrium nominal interest rate will increase.

C

The money supply curve will shift left, the money demand curve will shift right, and the equilibrium nominal interest rate will decrease.

D

The money supply curve will shift right, the money demand curve will shift right, and the equilibrium nominal interest rate will decrease.

E

The money supply curve will shift left, the money demand curve will shift left, and the equilibrium nominal interest rate will increase.