-The table above shows information on the quantity of money and the money demand schedules. Suppose that the interest rate is equal to 3 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 rises.
D) bond prices rise so that the interest rate rises.

Question

-The table above shows information on the quantity of money and the money demand schedules. Suppose that the interest rate is equal to 3 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 rises. 
D) bond prices rise so that the interest rate rises.

Quizplus · Accepted Answer

At an interest rate of 3 percent, if the money demand exceeds the money supply, people will sell bonds to obtain more money, causing the interest rate to rise.

-The Table Above Shows Information on the Quantity of Money