If There Is Excess Money Supply, What Will People Do

question 16

Multiple Choice

If there is excess money supply, what will people do and what happens to the interest rate?

• A) People will deposit more into interest-bearing accounts, and the interest rate will fall.
• B) People will deposit more into interest-bearing accounts, and the interest rate will rise.
• C) People will withdraw money from interest-bearing accounts, and the interest rate will fall.
• D) People will withdraw money from interest-bearing accounts, and the interest rate will rise.

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Definitions:

Investing Activities

Transactions involving the acquisition and disposal of long-term assets and investments not included in cash equivalents.

Financing Activities

Transactions involving long-term liabilities, stockholders' equity, and changes in short-term loans that affect a company's cash flow.

Note Payable

A written agreement to pay a specific sum of money, usually including interest, at a future date.

Statement of Cash Flows

A financial report that provides aggregate data regarding all cash inflows and outflows a company receives.