Use the following graph to answer the next question.
In the graph, 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% interest rate. If the money supply increases, then Sm2 will shift to
A. Sm3 and the interest rate will be 8%.
B. Sm3 and the interest rate will be 4%.
C. Sm1 and the interest rate will be 8%.
D. Sm1 and the interest rate will be 4%.
Answer: B
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