Refer to the graph , in which Dt is the transactions demand for money, Dm is the total demand for money, and Sm is the supply of money. The market is initially in equilibrium at a 6 percent interest rate. If the money supply increases, then Sm2 will shift to:
A. Sm3 and the interest rate will be 4 percent
B. Sm3 and the interest rate will be 8 percent
C. Sm1 and the interest rate will be 8 percent
D. Sm1 and the interest rate will be 4 percent
A. Sm3 and the interest rate will be 4 percent
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