If at the Prevailing Interest Rate the Quantity of Money

question 74

Multiple Choice

If at the prevailing interest rate the quantity of money demanded is $2 trillion, and the supply of money is $1.5 trillion, then which of the following is true ?

• A) There is a shortage of money, and consequently interest rates must fall in order to achieve an equilibrium in the money market.
• B) There is a surplus of money, and consequently interest rates must fall in order to achieve an equilibrium in the money market.
• C) There is shortage of money, and consequently interest rates must rise in order to achieve an equilibrium in the money market.
• D) There is a surplus of money, and consequently interest rates must rise in order to achieve an equilibrium in the money market.

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Definitions:

Egg Yolks

The yellow, nutrient-rich part of an egg that contains fats, proteins, vitamins, and minerals, serving as a primary food source for the developing embryo.

Fortified Breads

Breads that have been enriched with additional vitamins and minerals, beyond what they naturally contain.

Selenium

A chemical element with symbol Se and atomic number 34, known for its role in human health as a trace mineral important for the antioxidant activity of certain enzymes.