If the Equilibrium Interest Rate in the Money Market Is

question 69

Multiple Choice

If the equilibrium interest rate in the money market is 5%, then at an interest rate of 2%, money demanded is _____ than money supplied.

• A)less than
• B)greater than
• C)equal to
• D)It is impossible to predict which is greater, money demanded or money supplied.

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Definitions:

Federal Government

The national government of a federation, which holds the authority to govern issues that affect the entire country, distinct from state or local governments.

Laffer Curve

A theoretical representation of the relationship between tax rates and tax revenue, suggesting there is an optimal tax rate that maximizes revenue without deterring economic activity.

Basic Contention

The fundamental disagreement or argument typically relating to a particular issue or theory.

Classical

Pertains to economic theories and models that emphasize free markets, competition, and the self-regulating nature of economies, first developed in the 18th and 19th centuries.