When the money supply curve shifts from MS1 to MS2, Select one: a. None of the above is correct. b. the equilibrium price level decreases. c. the economy's ability to produce goods and services increases. d. the demand for goods and services decreases.

B) the equilibrium price level decreases.

Explanation:

When the money supply curve is MS1, the equilibrium price of money (interest rate is the price of money) is equal to 1/P₁. When the money supply curve shifts to the right to MS2, then the equilibrium price is 1/P₂. Rightward shifts of the supply curves always increase the quantity supplied at all the price levels, therefore they cause the equilibrium price to lower.

15 pounds of apples and 6 cups of flour

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