The U.S. government will probably return soon to a system of paper money backed by gold

In the above figure, if the interest rate is 8 percent

A) people sell bonds so as to convert them into money. B) people buy bonds and the interest rate falls. C) the Fed increases the quantity of money. D) people buy stocks, because stocks are more liquid than currency.

The law of one price (LOOP) indicates that:

a. The price of a good in one country should be equal to the exchange-rate-adjusted price of the same product in another country. b. The nominal wage rate in one country should be equal to the exchange-rate-adjusted wage of the average laborer in another country. c. All the above. d. None of the above. e. Nominal interest rates in countries should be identical because if they were not, arbitragers could make risk-free profits.