An Increase in the Interest Rate Would Induce People to

question 467

Multiple Choice

An increase in the interest rate would induce people to

• A) sell shares of stock and buy bonds, but would have no effect on their desire to hold money.
• B) get rid of all their money and buy stocks with it.
• C) sell their least liquid assets and hold more money in case interest rates go up again.
• D) hold a smaller fraction of their wealth in the form of money.

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