Refer to the The curve Sm refiects the fact that SolutionIn

Refer to the The curve Sm refiects the fact that

Solution

In the above diagram,the vertical money supply curve Sm reflects the fact that:

c) the stock of money is determined by the federal reserve system and does not change when the interest rate changes

As,the Fed decides the supply of money,the money supply remains fixed and a vertical straight line irrespective of change in interest rates which only changes with respect to the demand for money changes shown by Dm..