When the quantity of money demanded is greater than the quantity of money supplied, people ________Bonds and the interest rate _______.
A) buy; rises
B) sell; falls
C) buy; falls
D) sell; rises

Question

Quizplus · Accepted Answer

When the quantity of money demanded exceeds the quantity supplied, people sell bonds to obtain more money, causing bond prices to fall and interest rates to rise.

When the Quantity of Money Demanded Is Greater Than the Quantity