If There Is Excess Money Demand, What Will People Do

question 74

Multiple Choice

If there is excess money demand, what will people do and what happens to the interest rate?

• A) People will deposit more into interest-bearing accounts, and the interest rate will fall.
• B) People will deposit more into interest-bearing accounts, and the interest rate will rise.
• C) People will withdraw money from interest-bearing accounts, and the interest rate will fall.
• D) People will withdraw money from interest-bearing accounts, and the interest rate will rise.

---

Definitions:

Generate Losses

To incur negative financial results, typically by spending more than is earned or received in revenue.

Capital Market

A financial market in which long-term debt and equity-backed securities are bought and sold, serving as a platform for raising long-term funds.

Present Value

The present value of a future amount of money or series of payments, calculated using a predetermined interest rate.

Market Value

The market price at which you can currently trade a service or asset.