-The Table Above Gives the Quantity of Money and Money

question 313

Multiple Choice

$\begin{array}{|c|l|l|}\hline \begin{array}{c}\text { Interest rate } \\\text { (percent) }\end{array} & \begin{array}{l}\text { lantity of money } \\\text { lllions ofdollars) }\end{array} & \begin{array}{l}\text { Money demand } \\\text { billions of dollars) }\end{array} \\\hline 2 & 500 & 575 \\\hline 3 & 500 & 550 \\\hline 4 & 500 & 525 \\\hline 5 & 500 & 500 \\\hline 6 & 500 & 475 \\\hline 7 & 500 & 450 \\\hline\end{array}$
-The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 3 percent. The effect of this interest rate in the money market is that

• A) the money market is in equilibrium.
• B) bond prices rise so that the interest rate rises.
• C) people buy bonds and the interest rate falls.
• D) people sell bonds and the interest rate rises.