An Increase in the Demand for Treasury Bills Will

question 133

Multiple Choice

An increase in the demand for Treasury bills will

• A)increase the price of Treasury bills.
• B)increase the interest rate on Treasury bills.
• C)increase the opportunity cost of holding money vs.Treasury bills.
• D)eventually cause households to hold less money.

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Definitions:

Monetary Policy

The process by which the central bank or monetary authority of a country controls the supply of money, often targeting an inflation rate or interest rate to ensure price stability and general trust in the currency.

Elastic Currency

A currency system that can expand or contract in supply to accommodate economic needs and stabilize the economy.

Secondary Reserves

Liquid assets held by financial institutions that are not used for primary obligations but can be quickly converted to cash for emergency needs.

U.S. Government Securities

Financial instruments issued by the United States Department of the Treasury to finance federal government's expenditures.