In the money market, if the interest rate exceeds the equilibrium interest, there is a surplus of money. How is the surplus eliminated?
A) People buy bonds to rid themselves of the surplus money, bidding up their price and pushing interest rates down.
B) Banks will lend out the surplus, lowering interest rates.
C) The Federal Reserve will destroy currency, reducing the quantity of money.
D) The high interest rate increases the demand for money, eliminating the surplus.
A
You might also like to view...
Slower growth in labor demand in combination with increases in labor supply explains ________ accompanied by ________.
A. a slowdown in real wage growth; increasing wage inequality B. a slowdown in real wage growth; a decline in employment C. accelerated real wage growth; a decline in employment D. a slowdown in real wage growth; rapid employment growth
The process of making the best of our limited resources by doing the things we are best at and hiring other people to do the things we are not particularly good at is called
A) absolute advantage. B) comparative advantage. C) specialization. D) protectionism.
Strong growth in the U.S. during the 1990s may have been the result of
a. higher rates of government savings. b. reduced international trade barriers. c. strong labor productivity growth. d. stable inflation. e. All of the above
What causes the production possibility curve to be bowed out?
What will be an ideal response?