Question

How will each of the following scenarios impact the market for money

The economy moves into a downturn and the commercial banks become more cautious in their lending policies.

Please choose one of the following for EACH

1) impact on supply of money

a) decrease equilibrium quantity of money

b) equilibrium interest rate unchanged

c) increase equilibrium quantity of money

d) shift outwards/ to the right

e) shift inwards/ to the left

f) decrease equilibrium interest rate

g) move along the curve

h) increase equilibrium interest rate

I) equilibrium quantity of money unchanged

2) impact on equilibrium interest rate

a) decrease equilibrium quantity of money

b) equilibrium interest rate unchanged

c) increase equilibrium quantity of money

d) shift outwards/ to the right

e) shift inwards/ to the left

f) decrease equilibrium interest rate

g) move along the curve

h) increase equilibrium interest rate

I) equilibrium quantity of money unchanged

3) impact on quantity of money

a) decrease equilibrium quantity of money

b) equilibrium interest rate unchanged

c) increase equilibrium quantity of money

d) shift outwards/ to the right

e) shift inwards/ to the left

f) decrease equilibrium interest rate

g) move along the curve

h) increase equilibrium interest rate

I) equilibrium quantity of money unchanged

4)impact on demand for money

a) decrease equilibrium quantity of money

b) equilibrium interest rate unchanged

c) increase equilibrium quantity of money

d) shift outwards/ to the right

e) shift inwards/ to the left

f) decrease equilibrium interest rate

g) move along the curve

h) increase equilibrium interest rate

I) equilibrium quantity of money unchanged