Assume the Demand for Money Curve Is Stationary and the Fed

question 74

Multiple Choice

Assume the demand for money curve is stationary and the Fed increases the money supply. The result is that people:

• A) increase the supply of bonds, thus driving up the interest rate.
• B) increase the supply of bonds, thus driving down the interest rate.
• C) increase the demand for bonds, thus driving up the interest rate.
• D) increase the demand for bonds, thus driving down the interest rate.

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