In the money market,an excess supply of money is equivalent to an excess supply of bonds.

Question

Quizplus · Accepted Answer

In the money market, an excess supply of money typically leads to lower interest rates, encouraging borrowing and spending, but it is not equivalent to an excess supply of bonds. An excess supply of bonds would imply that there are more bonds available than investors want to buy, potentially leading to lower bond prices and higher yields, which is a different dynamic than an excess supply of money.

In the Money Market,an Excess Supply of Money Is Equivalent