explain what happen to (1) MS and (ii) interest rates

when the real economy expands (Y rises) the demand for money expands. as a result, households hold more cash and supply of money expands

agree or disagree

a. decrease

b. remain unchanged

c. increase

d. agree

e. disagree

impact on MS

a. decrease

b. remain unchanged

c. increase

d. agree

e. disagree

impact on interest rate

a. decrease

b. remain unchanged

c. increase

d. agree

e. disagree

carefully explain the impact on the money demand curve, money supply curve, interest rate and the quantity of money due to each of the following.

the economy grows (GDP increases) but the central bank moves to keep interest rate constant

impact on money supply curve

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

impact on money demand curve

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

impact on quantity of money

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

impact on equilibrium interest rate

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

carefully explain the impact on the money demand curve, money supply curve, equilibrium interest rate and the quantity of money due to each of the following.

the government receives a U.S dollar loan and exchanges it for local currency at the central bank so it can pay public sector salaries in local currency.

impact on money supply curve

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

impact on money demand curve

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

impact on quantity of money

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged

impact on equilibrium interest rate

a. shift inwards/to the left

b. shift outwards/to the right

c. decrease

d. increase

e. unchanged