Exhibit 20-5 Money, investment and product markets
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In Exhibit 20-5, when the money supply increases from MS1 to MS2, the equilibrium interest rate:
A. decreases from i1 to i2, decreasing investment spending from I2 to I1.
B. increases from i2 to i1, increasing investment spending from I1 to I2.
C. increases from i2 to i1, decreasing investment spending from I2 to I1.
D. decreases from i1 to i2, increasing investment spending from I1 to I2.
Answer: D
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