Multiple Choice
Use the following to answer questions:
Figure: Short-Run Determination of the Interest Rate 
-(Figure: Short-Run Determination of the Interest Rate) Look at the figure Short-Run Determination of the Interest Rate. If the money supply is at MS1 and the central bank buys Treasury bills, then the resulting short-run shift in the supply of savings (loanable funds) may be represented by a shift of the:
A) money supply curve to MS2, which raises the interest rate.
B) supply of loanable funds from S1 to S2, which lowers the interest rate.
C) supply of loanable funds from S2 to S1, which raises the interest rate.
D) interest rate from r2 to r1.
Correct Answer:
Verified
Correct Answer:
Verified
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