Figure 112 Alt Text for Figure 11

Figure 11.2 Alt text for Figure 11.2: In figure 11.2, a graph shows shift in money supply.
Long description for Figure 11.2: The x-axis is labelled, quantity of money, M (billions of dollars) , with values $90 and 95 marked.The y-axis is labelled, interest rate, i, with values 3 and 4% marked.3 lines are shown; MS1, MS2, and MD.Line MD begins at the top left corner and slopes down toward the end of the x-axis.Line Money supply MS1 is perpendicular to the x-axis, from point 95.Line MS2 is perpendicular to the x-axis, and begins from the value $90, to the left of line MS1.Line MD meets line MS1 at point (95, 3) , half way along both lines.Line MD meets line MS2 at point ($90, 4%) , approximately 3 quarters of the way along both lines.These points of intersection are connected to their respective coordinates on the y-axis using dotted lines.
-Refer to Figure 11.2.In the figure above, when the money supply shifts from MS₁ to MS₂, at the interest rate of 3 percent households and firms will

A) buy Canada bonds.
B) sell Canada bonds.
C) neither buy nor sell Canada bonds.
D) want to hold less money.
E) increase their purchases of durable goods.

Correct Answer:

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