An decrease in the money supply will have what affect on the money supply curve?Multiple choice question.It will make it flatter.It will shift it right.It will shift it left.It will make it steeper.
Question
An decrease in the money supply will have what affect on the money supply curve?Multiple choice question.It will make it flatter.It will shift it right.It will shift it left.It will make it steeper.
Solution
The correct answer is "It will shift it left."
Here's why: The money supply curve is a graphical representation of the amount of money in an economy at different interest rates. When the money supply decreases, there is less money available at each interest rate, which shifts the entire curve to the left. This is because at each interest rate, there is now less money available than before. So, the decrease in the money supply does not change the slope of the curve (making it flatter or steeper), but rather shifts the entire curve to the left.
Similar Questions
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