Q486
Equilibrium interest rate increases and economic conditions decreases then supply curve must shift to
A.
down and to left
B.
down and to right
C.
up and to left
AnswerD.
up and to right
Answer: Option C
Solution
Answer: Option C
Solution:
Equilibrium interest rate increases and economic conditions decreases then supply curve must shift to up and to left. The equilibrium interest rate is the rate at which the quantity of money demanded is equal to the quantity of money supplied. The Federal Reserve can alter the equilibrium interest rate by adjusting the supply of money. The demand for money and supply of money can be graphed to determine the equilibrium interest rate.