Suppose That the Equilibrium Nominal Interest Rate Is 4 Per

question 7

Multiple Choice

Suppose that the equilibrium nominal interest rate is 4 per cent and the equilibrium quantity of money is $1 billion.At any interest rate above 4 per cent,

• A)more than $1 billion will be supplied and the interest rate will rise.
• B)there is a shortage of money and the interest rate will rise.
• C)more than $1 billion will be supplied and bond prices will fall.
• D)less than $1 billion will be demanded and bond prices will increase.
• E)less than $1 billion will be demanded and bond prices will fall.

---

Definitions:

Ethanol

A renewable fuel made from various plant materials, commonly used as an additive to gasoline to reduce emissions and increase octane.

Government Subsidized

Financial support provided by a government to individuals, organizations, or industries to encourage or protect economic activities deemed beneficial.

Medicaid Program

A government-funded program in the United States providing health coverage to eligible low-income adults, children, pregnant women, elderly adults, and people with disabilities.

Federal Government

The national government of a federation, made up of separate states, where powers are divided between the national government and the state governments.