If the Interest Rate Is Above the Equilibrium Interest Rate

question 457

Multiple Choice

If the interest rate is above the equilibrium interest rate, then

• A) there is an excess demand for money.
• B) the quantity of money demanded exceeds the quantity supplied.
• C) people will sell bonds and the interest rate will fall.
• D) people will buy bonds and the interest rate will fall.

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Definitions:

Level of Activity

A measure of the volume of production or operations, often influencing cost behavior and used to allocate fixed costs to units of product.

Revenue Variance

The difference between the actual revenue earned and the budgeted or expected revenue.

Static Planning Budget

A budget based on a single level of output, not adjusted for changes in activity levels.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, allowing for better budget-to-actual comparisons.