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Assume the money market is currently in equilibrium, as shown in the graph below. a. Suppose people feel that money is not a safe asset
Assume the money market is currently in equilibrium, as shown in the graph below. a. Suppose people feel that money is not a safe asset and desire to hold more gold and less money. Use the graph to show the effect on the money market. Instructions: Use the tool provided "New Curve" to plot the appropriate line. Plot only the endpoints of the line (2 points total). Label your line appropriately. b. As people desire to hold less money as an asset multiple choice the money supply curve will increase, causing a surplus of money, which makes interest rates in the money market fall. the money supply curve will decrease, causing a shortage of money, which makes interest rates in the money market rise. the money demand curve will increase, causing a shortage of money, which makes interest rates in the money market rise. the money demand curve will decrease, causing a surplus of money, which makes interest rates in the money market fall
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