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Refer to the Above Market for Money Diagram

Question 111

Multiple Choice

Refer to the above market for money diagram.Given D<sub>m</sub> and S<sub>m</sub>, an interest rate of i<sub>3</sub> is not sustainable because: A) the supply of bonds in the bond market will decline and the interest rate will rise. B) the supply of bonds in the bond market will increase and the interest rate will decline. C) the demand for bonds in the bond market will decline and the interest rate will rise. D) the demand for bonds in the bond market will rise and the interest rate will fall. Refer to the above market for money diagram.Given Dm and Sm, an interest rate of i3 is not sustainable because:


A) the supply of bonds in the bond market will decline and the interest rate will rise.
B) the supply of bonds in the bond market will increase and the interest rate will decline.
C) the demand for bonds in the bond market will decline and the interest rate will rise.
D) the demand for bonds in the bond market will rise and the interest rate will fall.

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