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The diagram at right shows the demand for money and the supply of money. a. The money demand function is downward sloping because Ms O A. a decrease in the interest rate decreases the opportunity cost of holding money and leads to a reduction in the quantity of money demanded. O B. a decrease in the interest rate increases the opportunity cost of holding money and leads to an increase in the quantity of money demanded. O C. an increase in the interest rate increases the opportunity cost of holding money and leads to a reduction in the quantity of money demanded. O D. an increase in the interest rate decreases the opportunity cost of holding money and leads to an increase in the quantity of money demanded. b. If the interest rate is at ia there is an excess Interest Rate .... O A. supply of money, resulting in bond purchases, raising bond prices, increasing interest rates to i*. O B. supply of money, resulting in bond sales, lowering bond prices, increasing interest rates to it. O C. demand for money, resulting in bond purchases, raising bond prices, increasing interest rates to it. MD ( Y, P ) O D. demand for money, resulting in bond sales, lowering bond prices, increasing interest rates to i*. Quantity of Money c. If the interest rate is at in there is an excess O A. demand for money, resulting in lower bond demand, lowering bond prices, decreasing interest rates to i". O B. supply of money, resulting in lower bond demand, lowering bond prices, decreasing interest rates to i*. O C. demand for money, resulting in higher bond demand, raising bond prices, decreasing interest rates to it. O D. supply of money, resulting in higher bond demand, raising bond prices, decreasing interest rates to it. d. If there is an increase in the transactions demand for money, this O A. shifts the money demand to the left, lowering equilibrium interest rates. O B. shifts the money supply to the right, lowering equilibrium interest rates. O C. shifts the money supply to the left, raising equilibrium interest rates. O D. shifts the money demand to the right, raising equilibrium interest rates