Table 24.5.1 -Refer to Table 24.5.1. the Spreadsheet Provides Information About the Provides

question 87

Multiple Choice

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.

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