If the actual interest rate is below the equilibrium interest rate, the
a. Fed must intervene in financial markets to restore the interest rate to its equilibrium value
b. price of bonds will increase
c. price of bonds will decrease
d. money supply will increase until the interest rate rises
e. money supply will decrease until the interest rate rises
C
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The law of increasing additional costs is due to
A) taxes. B) scarcity. C) the fact that it is more difficult to use resources efficiently the more society produces. D) the fact that resources are not perfectly adaptable for alternative uses.
If the purchasing power parity theory were literally true
a. we should see some nations devaluing their currencies relative to the U.S. dollar while other nations revalue their currencies b. the price of a traded good should be the same everywhere in the world c. the price of a Big Mac should be the same everywhere in the world d. the exchange rate should be the same everywhere in the world e. prices should tend toward equality with exchange rates