Which of the following would lead to a decrease in the equilibrium interest rate?O a.Decrease the money demandO b. Decrease the money supplyОс.Increase in money demandO d. Increase the money supplyO e. Directly lower the interest rate and change neither the money demand nor the money supply

Demand curve of money shows the amount of money demanded at the particular interest rate whereas,…

Which of the following would lead to a decrease in the equilibrium interest rate? O a. Decrease the money demand O b. Decrease the money supply O C. Increase in money demand O d. Increase the money supply e. Directly lower the interest rate and change neither the money demand nor the money supply

Which of the following would lead to a decrease in the equilibrium interest rate? O a. Decrease the money demand O b. Decrease the money supply O C. Increase in money demand O d. Increase the money supply e. Directly lower the interest rate and change neither the money demand nor the money supply

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter33: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 4CQQ

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

Which of the following would lead to a decrease in the equilibrium interest rate?
O a.
Decrease the money demand
O b. Decrease the money supply
Ос.
Increase in money demand
O d. Increase the money supply
O e. Directly lower the interest rate and change neither the money demand nor the money supply

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