Which of the Following Statements Is True If Interest Rates

question 122

Multiple Choice

Which of the following statements is true if interest rates were zero?

• A) The demand for bonds increases because bonds will be a more attractive alternative to money.
• B) People will hold their wealth in the form of money rather than in bonds.
• C) Bonds and money will become perfect substitutes since both are non-interest earning assets.
• D) The supply of bonds will increase.

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Definitions:

Small States

Countries or regions with relatively low population and/or land area, often with limited economic or political power on the global stage.

Northern States

Refers to those states in the United States located in the North, historically known for their opposition to slavery during the Civil War era.

Southern States

States located in the southern region of the United States, often characterized by unique historical, cultural, and social traits.

Articles of Confederation

The initial agreement between the 13 American states that served as the United States' first constitution, establishing a confederation of sovereign states with a weak central government.