Multiple Choice
Suppose that the current money market equilibrium features an interest rate of 5 percent and a quantity of $2 trillion. If the Fed raises the discount rate, which of the following is most likely to be the new money market equilibrium?
A) An interest rate of 6 percent and a quantity of $1.5 trillion.
B) An interest rate of 5 percent and a quantity of $2 trillion.
C) An interest rate of 4 percent and a quantity of $2.5 trillion.
D) None of the above.
Correct Answer:
Verified
Correct Answer:
Verified
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