If There Is an Excess Demand for Money in the Economy

question 131

Multiple Choice

If there is an excess demand for money in the economy,

• A) there is also an excess supply of money.
• B) there is also an excess demand for bonds.
• C) there is also an excess supply of bonds.
• D) the interest rate will fall.
• E) there is also an excess supply of housing.

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Definitions:

Deductible IRA Contribution

A contribution to an Individual Retirement Account that can be subtracted from gross income, reducing taxable income for the year the contribution is made.

Active Participant

An individual who is actively contributing to a qualified retirement plan or is credited with service under the plan for the tax year.

Qualified Pension Plan

A retirement plan that meets the requirements of the Internal Revenue Code, thereby offering tax advantages such as deferred taxation on earnings.

Nontaxable

Describes income or transactions that are not subject to income tax by law or specific exemption.