Principles of Macroeconomics / Unit 12 MAC 1112 short lesson, about 20 seconds
The Money Supply Curve and Equilibrium
Captions available
The idea
The money supply is set by the central bank rather than by the interest rate, so it draws as a vertical line. Equilibrium is where the two curves cross.
In practice
With a supply of 900 billion, the rate settles where demand equals 900.
Where people slip
The interest rate is an outcome, not an input; the bank chooses the quantity.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
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