Use the Following to Answer Questions

question 75

Multiple Choice

Use the following to answer questions :
Figure: Money Market I
-(Figure: Money Market I) Look at the figure Money Market I. If the interest rate is at r_L and the central bank neither buys nor sells Treasury bills, then the interest rate will:

• A)move toward point H.
• B)move toward point L.
• C)move toward point E.
• D)not change.

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Definitions:

Borrowers

Individuals or entities that take out loans from financial institutions or individuals, agreeing to repay them over time, typically with interest.

Speculative Motive

The intention to hold cash for the purpose of taking advantage of future changes in the value of assets, securities, or commodities.

Double Coincidence Of Wants

A situation in barter economies where two parties each have what the other wants and agree to trade directly.

Barter

The exchange of goods or services between parties without the use of money as a medium of exchange.