FIGURE 27-3 -Refer to Figure 27-3.Part (I)of the Figure Shows the Money

question 21

Multiple Choice

FIGURE 27-3
-Refer to Figure 27-3.Part (i) of the figure shows the money market and the effect of an increase in the supply of money.The corresponding sequence of events in the bond market is as follows: The ________ of money at leads firms and households to ________ bonds,which leads to a(n) ________ in the price of bonds and a decrease in the interest rate.

• A)excess demand; buy; increase
• B)excess demand; sell; decrease
• C)excess supply; buy; decrease
• D)excess supply; sell; decrease
• E)excess supply; buy; increase

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Definitions:

Consumer's Income

The total amount of income or earnings available to a consumer for spending and saving after taxes are paid.

Budget Line

A graphical representation showing all possible combinations of two goods that can be purchased with a given budget at fixed prices.

Prices

The monetary value assigned to goods and services, determined by factors like supply and demand.

Income Increase

A rise in the amount of money earned by an individual or generated by a business, often resulting from wages, investments, or sales.