When the Interest Rate Is Above the Equilibrium Level

question 5

Multiple Choice

When the interest rate is above the equilibrium level,

• A)the quantity of money that people want to hold is less than the quantity of money that the Federal Reserve has supplied.
• B)people respond by buying interest-bearing bonds or by depositing money in interest-bearing bank accounts.
• C)bond issuers and banks respond by lowering the interest rates they offer.
• D)All of the above are correct.

---

Definitions:

Unemployment Benefits

Financial payments made by the government to individuals who are unemployed and meet certain eligibility requirements.

Income Taxes

Taxes levied by governments on the income generated by individuals or entities, which vary according to the level of income earned.

Federal Budget Surpluses

Occurs when a government's income exceeds its spending during a particular fiscal year.

Market Globalization

The process of integration and interaction among different national markets, leading to a global marketplace with diminished trade barriers.