Q510
If equilibrium interest rate increases with respect to increase in interest rate, then movement along supply of funds curve is
A.
shift left
B.
shift right
C.
upside movement
AnswerD.
downside movement
Answer: Option C
Solution
Answer: Option C
Solution:
If equilibrium interest rate increases with respect to increase in interest rate, then movement along supply of funds curve is upside movement. 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.