The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that
A: the money market is in equilibrium.
B: people buy bonds and the interest rate falls.
C: people sell bonds and the interest rate falls.
D: bond prices fall and so the interest rate falls.
A: the money market is in equilibrium.
B: people buy bonds and the interest rate falls.
C: people sell bonds and the interest rate falls.
D: bond prices fall and so the interest rate falls.
举一反三
- When the interest rate on a bond is above the equilibrium interest rate, in the bond market there is excess ________ and the interest rate will ________. A: demand; rise B: demand; fall C: supply; fall D: supply; rise
- When the interest rate on a bond is below the equilibrium interest rate, there is excess _________ in the bond market and the interest rate will _________ A: demand; rise B: demand; fall C: supply; fall D: supply; rise
- When the interest rate falls in the money market, the quantity of money demanded ________ and the quantity of money supplied ________. A: increases; decreases B: decreases; increases C: stays the same; decreases D: increases; stays the same
- The money market interest rate is the long-term interest rate determined by interbank borrowing on reserves. （ ） A: True B: False
- When bond interest rates become less volatile, the demand for bonds _________ and the interest rate _________. A: increases; rises B: increases; falls C: decreases; falls D: decreases; rises