Draw the graph · Macro · Money market
The reserve requirement is cut
MDmoney demand
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MSmoney supply
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Drag a curve sideways, or use its arrows. A curve you do not move is a curve you are saying stays put. Make each shift clear enough that a reader could see it.
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Money demand stays put. Money supply shifts right.
A lower reserve requirement lets banks lend more of each deposit, and each loan becomes a new deposit somewhere else. The quantity of money rises at every interest rate, so the money supply line shifts right. Money demand is unchanged.
The nominal interest rate falls.
Common mistake. Students sometimes shift money demand, thinking 'banks want fewer reserves.' Reserve rules change how much money banks create, which is supply.
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Lesson: Central Bank Tools
Every prompt here is one shift. The course chains them: a lesson on why the curve moves, a graded drawing, and spaced review that brings back the shifts you get wrong.