If people expect nominal interest rates to be higher in the future, the expected return to bonds ________, and the demand for money ________

The law of demand states that there is

A) an inverse relationship between income and quantity demanded, ceteris paribus. B) a direct relationship between income and quantity demanded, ceteris paribus. C) no relationship between taste and quantity demanded, ceteris paribus. D) an inverse relationship between price and quantity demanded, ceteris paribus.

Exhibit 16-5 Money, investment and product markets In Exhibit 16-5, when the money supply increases from MS1 to MS2, the equilibrium interest rate:

A. decreases from i1 to i2, decreasing investment spending from I2 to I1. B. increases from i2 to i1, increasing investment spending from I1 to I2. C. increases from i2 to i1, decreasing investment spending from I2 to I1. D. decreases from i1 to i2, increasing investment spending from I1 to I2.