In Keynes's liquidity preference framework,if there is excess demand for money,there is
A)excess demand for bonds.
B)equilibrium in the bond market.
C)excess supply of bonds.
D)too much money.

Question

Quizplus · Accepted Answer

In Keynes's liquidity preference framework, if there is excess demand for money, it means individuals and firms are holding more cash and less bonds than they would prefer. This leads to a decrease in the demand for bonds and an increase in the supply of bonds, resulting in excess supply of bonds. Therefore, option C is the correct choice. Options A, B, and D do not accurately reflect the relationship between excess demand for money and the bond market in Keynes's framework.

In Keynes's Liquidity Preference Framework,if There Is Excess Demand for Money,there