The money market clears as people with excess real balances:
a. buy bonds and drive down nominal rates of interest until the demand for real balances equals supply.
b. sell bonds and drive up nominal rates of interest until the demand for real balances equals supply.
c. increase spending, driving up nominal GDP and raising nominal rates of interest.
d. sell financial assets such as stocks to increase the total supply of real balances.
Ans: a. buy bonds and drive down nominal rates of interest until the demand for real balances equals supply.
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A country has an absolute advantage in the production of a good if that country
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