-In the above figure, if the interest rate is 4 percent, people
A) buy bonds so as to have a better store of value.
B) petition the Fed to tighten the quantity of money.
C) sell bonds so as to convert them into money.
D) buy stocks, because stocks are more liquid than currency.

Question

-In the above figure, if the interest rate is 4 percent, people
A) buy bonds so as to have a better store of value. 
B) petition the Fed to tighten the quantity of money. 
C) sell bonds so as to convert them into money. 
D) buy stocks, because stocks are more liquid than currency.

Quizplus · Accepted Answer

When the interest rate is 4 percent, people may sell bonds to convert them into money because they might expect higher returns elsewhere or need liquidity, as bonds may not be as attractive at this interest rate.

-In the Above Figure, If the Interest Rate Is 4