The equilibrium interest rate is determinedmultiple choiceto fluctuate over time.at the intersection of the total demand for money curve and the supply of money curve.at the intersection of the aggregate demand and aggregate supply curve.by the Fed

Suppose there is an increase in the total demand for money. In this case, themultiple choiceequilibrium interest rate will fall.money supply will fall.money supply will riseequilibrium interest rate will rise.

According to the theory of liquidity preference, a decrease in the money supply will cause the equilibrium interest rate to:remain the same.increase.fluctuate wildly.decrease.

When the central bank controls the interest rate, the aggregate demand (AD) curve is downward sloping because:Group of answer choicesa reduction in the money supply (M) will cause an increase in the interest rate, a reduction in investment, and a reduction in output.a reduction in the aggregate price level (P) will cause the central bank to reduce the interest rate and thus increase output.a reduction in P will cause an increase in the real wage, a reduction in employment, and a reduction in output.as P increases, goods and services become relatively more expensive and individuals respond by reducing the quantity demanded of goods and services.

The intersection of the IS and LM curves determines the equilibrium:money supply and national income.inflation and interest rate.national income and interest rate.national income and inflation.

An increase in the money supply, ceteris paribus, usuallyMultiple Choicedecreases the interest rate and increases aggregate demand.increases the interest rate and increases aggregate demand.increases the interest rate and decreases aggregate demand.decreases the interest rate and decreases aggregate demand.