In the Money Market, If the Interest Rate Exceeds the Equilibrium

question 384

Multiple Choice

In the money market, if the interest rate exceeds the equilibrium interest rate, there is a surplus of money. How is the surplus eliminated?

• A) People buy bonds to rid themselves of the surplus money, bidding up their price and pushing interest rates down.
• B) Banks will lend out the surplus, lowering interest rates.
• C) The Federal Reserve will destroy currency, reducing the quantity of money.
• D) The high interest rate increases the demand for money, eliminating the surplus.

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Definitions:

HT Receptors

Protein sites located on cell membranes, primarily serotonin receptors, which are involved in transmitting signals within the brain.

DA Receptors

Dopamine receptors, which are a class of G protein-coupled receptors that are targeted by dopamine to mediate its effects.

CRH Receptors

Proteins found in various tissues in the body that bind to corticotropin-releasing hormone, playing a key role in stress response and regulation.

Depressed Individuals

Individuals experiencing a chronic feeling of sadness or a lack of interest, which affects their day-to-day activities.