Assume the Fed Decreases the Money Supply and the Demand

question 72

Multiple Choice

Assume the Fed decreases the money supply and the demand for money curve is fixed. In response, people will:

• A) sell bonds, thus driving up the interest rate.
• B) buy bonds, thus driving down the interest rate.
• C) buy bonds, thus driving up the interest rate.
• D) sell bonds, thus driving down the interest rate.

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