-The Table Above Gives the Quantity of Money and Money

question 337

Multiple Choice

-The table above gives the quantity of money and money demand schedules. Suppose that the interest rate is equal to 6 percent. The effect of this interest rate in the money market is that

• A) the money market is in equilibrium.
• B) people buy bonds and the interest rate falls.
• C) people sell bonds and the interest rate falls.
• D) bond prices fall and so the interest rate falls.

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Definitions:

Indigenous Production

The process of manufacturing goods within a particular region or territory using local resources and labor.

Service Economy

An economic phase in which the service sector generates more wealth than the manufacturing sector of the economy, characterized by a high volume of services relative to goods.