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 MS2 and the central bank sells 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 MS1, which lowers 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 r1 to r2.
Correct Answer:
Verified
Correct Answer:
Verified
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