Use the Following to Answer Questions

question 39

Multiple Choice

Use the following to answer questions :
Figure: Equilibrium in the Money Market
-(Figure: Equilibrium in the Money Market) Look at the figure Equilibrium in the Money Market. If the rate of interest is below equilibrium, there will be an excess _____ money and the interest rate will _____.

• A)demand for; rise
• B)supply of; fall
• C)demand for; fall
• D)supply of; rise

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Definitions:

Journal Entry

A record of a financial transaction in an accounting system, consisting of debits and credits to maintain the double-entry accounting.

Discount on Bonds Payable

The gap between the nominal value of a bond and the price it is sold at when this price is lower than the bond's nominal value.

Redeems

The act of repaying or buying back something, such as a company repurchasing its own shares or a bond issuer paying back the principal at maturity.

Discount on Bonds Payable

The difference between the face value of bonds and their selling price when issued at less than their face value.