Refer to the given market-for-money diagrams. If the Federal Reserve increased the stock of money, the

A. D3 curve would shift leftward and the equilibrium interest rate would rise.
B. S curve would shift leftward and the equilibrium interest rate would rise.
C. S curve would shift rightward and the equilibrium interest rate would fall.
D. D3 curve would shift leftward and the equilibrium interest rate would fall.

ANSWER

C. S curve would shift rightward and the equilibrium interest rate would fall.