Suppose there are just two assets,bonds and money.In this case,an equilibrium between the quantity demanded of money and the quantity supplied of money implies

Question

Quizplus · Accepted Answer

Since there are only two assets in this scenario, the equilibrium between the quantity demanded and supplied of money implies equilibrium in the bond market as well. There is no excess demand or supply of bonds because that would imply a shift in the demand or supply curve for bonds, which is not given in the scenario. Thus, the correct answer is C.

Suppose There Are Just Two Assets,bonds and Money