If the interest rate rose above the equilibrium rate, people would attempt to __________ bonds. Bond prices would __________ and the interest rate would __________
A) sell; rise; fall
B) buy; rise; fall
C) sell; fall; rise
D) buy; rise; rise
B
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The tendency for inflation to change relatively slowly from year to year in industrial countries is called:
A. the inflation gap B. potential inflation. C. inflation inertia. D. inflation expectations.
By definition, when the economy is in equilibrium it must be true that
A) leakages equal injections. B) saving equals investment. C) government spending equals taxes. D) exports equal imports.
People learn to hold a specific quantity of money to purchase groceries, theater tickets, gasoline, clothes, film, and other items they habitually buy. This demand for money serves their
a. precautionary motive b. speculative motive c. transactions motive d. volatility motive e. liquidity motive
In 2009, the U.S. economy was experiencing a(n)
A. recessionary gap. B. inflationary gap. C. balance of trade deficit. D. hyperinflation.