Refer to the figure that shows the money demand and supply and investment demand curves. Mp Mso Ms1 Eo M, Mo Quantity of Money (i) Money demand and supply Investment Expenditure (ii) Investment demand...

Extracted text: Refer to the figure that shows the money demand and supply and investment demand curves. Mp Mso Ms1 Eo M, Mo Quantity of Money (i) Money demand and supply Investment Expenditure (ii) Investment demand Part (i) of the figure shows the money market and the effect of an increase in the supply of money. The corresponding sequence of events in of money at i , leads firms and households to the bond market is as follows: The bonds, which leads to a(n) il the price of bonds and a decrease in the interest rate. O A. excess demand; sell; increase O B. excess demand; sell; decrease O C. excess supply; buy; decrease O D. excess supply; buy; increase Refer to the money demand curve. Given the money demand curve, Mp, an increase in the quantity of money demanded from M, to M, can be caused by O A. an increase in the price level. O B. an increase in the rate of interest. C. a decrease in the price level. O D. a decrease in the rate of interest. 1 * Mp Mo M, Quantity of Money Interest Rate Interest Rate Interest Rate