Question: 24. A decrease in the money supply causes interest rates to (rise, fall),whichcauses con sumption and investment to (rise, fall). The changes in consumption and

24. A decrease in the money supply causes interest rates to (rise, fall),whichcauses con sumption and investment to (rise, fall). The changes in consumption and investment cause aggregate demand to

(increase, decrease), which causes equilibrium income to (rise, fall). Use the fol lowing graphs to illustrate the sequence of events following a decrease in the money supply.

(a)

Interest Rate (percent)

(b)

Price Level Ms1 i1 Md1 M1 Quantity of Money (billions of dollars)

AS1 P1 Y1 Real GDP (dollars)

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