-The Table Above Gives the Quantity of Money and Money

question 30

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 6 percent. The effect of this interest rate in the money market is that

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

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