If the supply of money is reduced, we would expect:
A)the demand for money to increase.
B)interest rates to fall
C)bond prices to fall.
D)none of the above to occur.

Question

Quizplus · Accepted Answer

When the supply of money is reduced, it becomes more difficult for people and institutions to obtain cash, which in turn can lead to a decrease in demand for bonds. This decrease in demand ultimately results in a decrease in bond prices.

If the Supply of Money Is Reduced, We Would Expect