Nominal interest rate (percent per year) 9 The graph shows the demand for money curve and the supply of money curve. The European Central Bank (ECB) increases the quantity of real money supplied to 5.0 trillion. Draw a new MS curve that shows the effect of the ECB's action. Label it. Draw a point at the new equilibrium quantity of money and interest rate. MS 8 7- Before the ECB increases the quantity of money, the equilibrium interest rate is percent a year. 6 After the ECB increases the quantity of money, at an interest rate of 4 percent a year, people want to hold bonds. money than the quantity supplied, so they 5- 14 O A. more; buy 4 3- B. less; buy OC. more; sell OD. less; sell 2 1- The price of a bond and the interest rate 1.5 MD 14.0 2'5 3.5 4.5 5.5 Quantity of money (trillions of 2010 euros) O A. falls, rises OB. falls; falls >>> Draw only the objects specified in the question. O C. rises; rises O D. rises, falls Nominal interest rate (percent per year) 9 The graph shows the demand for money curve and the supply of money curve. The European Central Bank (ECB) increases the quantity of real money supplied to 5.0 trillion. Draw a new MS curve that shows the effect of the ECB's action. Label it. Draw a point at the new equilibrium quantity of money and interest rate. MS 8 7- Before the ECB increases the quantity of money, the equilibrium interest rate is percent a year. 6 After the ECB increases the quantity of money, at an interest rate of 4 percent a year, people want to hold bonds. money than the quantity supplied, so they 5- 14 O A. more; buy 4 3- B. less; buy OC. more; sell OD. less; sell 2 1- The price of a bond and the interest rate 1.5 MD 14.0 2'5 3.5 4.5 5.5 Quantity of money (trillions of 2010 euros) O A. falls, rises OB. falls; falls >>> Draw only the objects specified in the question. O C. rises; rises O D. rises, falls