The ________ of money at i0 leads firms and households to ________ bonds, which leads to a(n) ________ in the price of bonds and an increase in the interest rate. A. excess supply; buy; decrease B. excess demand;sell;decrease C. excess supply;buy;increase D. excess demand; sell; increase
The ________ of money at i0 leads firms and households to ________ bonds, which leads to a(n) ________ in the price of bonds and an increase in the interest rate. A. excess supply; buy; decrease B. excess demand;sell;decrease C. excess supply;buy;increase D. excess demand; sell; increase
Chapter15: Monetary Theory And Policy
Section: Chapter Questions
Problem 1.2P
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Part (i) of the figure shows the money market and the effect of a decrease in the supply of money. The corresponding sequence of events in the bond market is as follows: The ________ of money at i0 leads firms and households to ________ bonds, which leads to a(n) ________ in the price of bonds and an increase in the interest rate.
A. excess supply; buy; decrease
B. excess demand;sell;decrease
C. excess supply ;buy;increase
D. excess demand; sell; increase
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