If the interest rate is above the equilibrium interest rate, then
A) there is an excess demand for money.
B) the quantity of money demanded exceeds the quantity supplied.
C) people will sell bonds and the interest rate will fall.
D) people will buy bonds and the interest rate will fall.

Question

Quizplus · Accepted Answer

When the interest rate is above the equilibrium rate, people will buy bonds because they are relatively cheaper, which increases the demand for bonds and causes the interest rate to fall.

If the Interest Rate Is Above the Equilibrium Interest Rate