Multiple Choice
Suppose that the equilibrium nominal interest rate is 4 percent and the equilibrium quantity of money is $1 trillion. At any interest rate above 4 percent,
A) less than $1 trillion will be demanded and bond prices will increase.
B) less than $1 trillion will be demanded and bond prices will fall.
C) more than $1 trillion will be supplied and bond prices will fall.
D) more than $1 trillion will be supplied and the interest rate will rise.
E) there is a shortage of money and the interest rate will rise.
Correct Answer:
Verified
Correct Answer:
Verified
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