Use the Table Below to Answer the Following Questions

question 65

Multiple Choice

Use the table below to answer the following questions.
Table 24.5.1

-Refer to Table 24.5.1. The spreadsheet provides information about the demand for money in Minland. Column A is the nominal interest rate, r. Columns B and C show the quantity of money demanded at two different levels of real GDP: Y₀ is $10 billion and Y₁ is $20 billion.
The quantity of money is $3 billion. Real GDP is $20 billion.
If the interest rate is less than 4 percent a year,

• A)people sell bonds, the price of a bond falls, and the interest rate rises.
• B)people buy bonds, the price of a bond rises, and the interest rate rises.
• C)people sell bonds, the price of a bond falls, and the interest rate falls.
• D)people buy bonds, the price of a bond rises, and the interest rate falls.
• E)the demand for money increases.

---

Definitions:

Maturity Value

The total amount payable to an investor at the end of a security's hold period, including both the principal and interest.

Maturity Value

The total amount that will be paid to an investor at the maturity date of a financial instrument, including principal and interest.

Bank Discount

The difference between the face value of a banknote or security and its selling price, before it reaches its maturity.

Discount Period

The time frame within which a buyer can pay less than the full amount due by taking advantage of a discount offered by the seller.