If people have only two ways of holding their wealth,money or bonds,a surplus in the money market implies a surplus in the bond market.

Question

Quizplus · Accepted Answer

A surplus in the money market implies an excess supply of money, which typically leads to people buying more bonds to utilize their excess cash. This increased demand for bonds would reduce any surplus in the bond market, not create one.

If People Have Only Two Ways of Holding Their Wealth,money