When the Interest Rate Is Below the Equilibrium Level

question 55

Multiple Choice

When the interest rate is below the equilibrium level,

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

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Definitions:

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