Multiple Choice
Suppose the money market has an equilibrium interest rate of 5 percent. If the actual interest rate is 3 percent, which of the following occurs to bring the money market back to equilibrium?
A) People buy bonds, the price of bonds rises and the interest rate rises.
B) People buy bonds, the price of bonds falls and the interest rate rises.
C) People sell bonds, the price of bonds rises and the interest rate rises.
D) People sell bonds, the price of bonds falls and the interest rate rises.
Correct Answer:
Verified
Correct Answer:
Verified
Q527: Traveler's checks are included in M1 but
Q528: The tools at the disposal of the
Q529: Briefly describe the Federal Reserve System, how
Q530: The required reserve ratio<br>A) is the amount
Q531: Given a desired reserve ratio of 20
Q533: If there is an excess quantity of
Q534: International data supports the quantity theory of
Q535: The larger the public's currency drain from
Q536: According to the quantity theory of money,
Q537: In the United States today, money consists