When the Quantity of Money Demanded Is Greater Than the Quantity

question 509

Multiple Choice

When the quantity of money demanded is greater than the quantity of money supplied, people ________ bonds and the interest rate ________.

• A) sell; rises
• B) sell; falls
• C) buy; rises
• D) buy; falls

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Definitions:

Risky Assets

Assets that carry a significant possibility of loss along with the potential for higher rewards.

Money Market Mutual Funds

Investment funds that pool investors' money to purchase short-term, high-quality debt securities, offering liquidity and earning interest.

Check-Writing Privileges

The ability granted to an individual to write checks against an account, such as a money market account, that typically doesn't offer this feature.

Bank Checking Accounts

Banking services that allow individuals and businesses to deposit money and withdraw funds, typically through issuing checks or electronic transfers.