Refer to the graph below, in which D_tis the transactions demand for money, D_mis the total demand for money, and S_mis the supply of money. If the market for money is in equilibrium at a 6 percent rate of interest and the money supply increases, then S_m2will shift to:

Multiple Choice

• S_m3and the interest rate will be 4 percent.
• S_m1and the interest rate will be 4 percent.
• S_m1and the interest rate will be 8 percent.
• S_m3and the interest rate will be 8 percent.

Refer to the graph below. in which D1 is the transactions demand for money, D,\" is the total demand for money. and 5m is the supply of money. If the market for money is in equilibrium at a 6 percent rate of interest and the money supply increases. then 5m! will shift to: 3:111 Sm? Ema Rate of ink-rest 125 HS 250 325 Quantity of money