If the Nominal Interest Rate Is Below the Equilibrium Value

question 45

Multiple Choice

If the nominal interest rate is below the equilibrium value, then the quantity demanded of money is ________ than the quantity supplied of money, bond prices will ________, and the nominal interest rate will ________.

• A)greater; fall; increase
• B)greater; fall; decrease
• C)greater; rise; increase
• D)less; fall; increase

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Definitions:

Deferred Revenues

Income received by a company for goods to be delivered or services to be provided in the future, recorded as a liability until earned.

Liability

A financial obligation or debt owed by a business or individual to another entity, to be paid in the future.

Prepaid Rent

An expense that has been paid in advance and is considered an asset until the benefit of the payment is consumed.

Rent Expense

An expense incurred from occupying rental property or equipment for business operations.