Suppose That the Equilibrium Nominal Interest Rate Is 5 Per

question 93

Multiple Choice

Suppose that the equilibrium nominal interest rate is 5 per cent and the equilibrium quantity of money is $1 billion. At any interest rate below 5 per cent,

• A) there will be a surplus of money and bond prices will fall.
• B) the interest rate will rise and bond prices will fall.
• C) the supply of money will decrease.
• D) the interest rate will fall and bond prices will fall.
• E) there will be a surplus of money and bond prices will increase.

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