Refer to the given market-for-money diagrams. If the interest rate was at 3 percent, people would:
A. sell bonds, which would cause bond prices to fall and the interest rate to rise.
B. buy bonds, which would cause bond prices to fall and the interest rate to rise.
C. sell bonds, which would cause bond prices to rise and the interest rate to rise.
D. buy bonds, which would cause bond prices to rise but have an uncertain effect upon the
interest rate.
A. sell bonds, which would cause bond prices to fall and the interest rate to rise.
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The costs associated with recalculating prices and printing new price lists when there is inflation are known as
A) menu costs. B) diminishing costs. C) shoe leather costs. D) chain-index costs.
Which of the following statements is true?
A) If higher water prices encourage a landlord to place bricks in the water tanks of his toilets to reduce water usage, then for him bricks are substitutes for water. B) If higher gasoline prices encourage a potential vacationer to stay at home and read a good book by the fire, rather than drive through the country, then for her firewood is a substitute for gasoline. C) Both A and B are true. D) None of the above are true.