In the money market,an excess demand for money is equivalent to an excess demand for bonds.

Question

Quizplus · Accepted Answer

In the money market, an excess demand for money means that individuals and institutions want to hold more cash, which leads to a decrease in the interest rate. On the other hand, an excess demand for bonds means that individuals and institutions want to invest more in bonds, which leads to an increase in the interest rate. Therefore, an excess demand for money is not equivalent to an excess demand for bonds.

In the Money Market,an Excess Demand for Money Is Equivalent