If There Is Excess Money Demand, What Will People Do

question 74

Multiple Choice

If there is excess money demand, 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:

Bankrupt

A legal situation in which an individual or firm finds that it cannot make timely interest payments on money it has borrowed. In such cases, a bankruptcy judge can order the individual or firm to liquidate (turn into cash) its assets in order to pay lenders at least some portion of the amount they are owed.

Normal Profit

The minimum level of profit needed for a company to remain competitive in the market, typically considered a break-even point not including opportunity costs.

Production Technology

The methods, equipment, and software used in the creation of goods and services, emphasizing efficiency and effectiveness.

Business Organization

Refers to the structure and mechanisms through which a business operates and is governed, including sole proprietorships, partnerships, and corporations.