For the Following Questions, Consult the Diagram Below

question 114

Multiple Choice

For the following questions, consult the diagram below.
Figure 15-1
-Refer to Figure 15-1. At an interest rate of 4 percent, how much is the excess money demand or supply?

• A) There is an excess money demand equal to the distance between a and b.
• B) There is an excess money demand equal to the distance between b and c.
• C) There is an excess money supply equal to the distance between b and a.
• D) There is an excess money supply equal to the distance between c and b.

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Definitions:

Interest-Bearing Note

A debt instrument that pays interest to the holder until the maturity date, at which point the principal is repaid.

Interest

The cost of borrowing money or the return earned on an investment, typically expressed as a percentage.

Interest-Bearing Note

A debt instrument in which the issuer is obligated to pay a specified interest rate on the principal amount at regular intervals until maturity, in addition to repaying the principal.