If the quantity supplied of money exceeds the quantity demanded of money, people will ________ bonds which will cause bond prices to ________ and the nominal interest rate to ________ until the quantity demanded and quantity supplied of money are equal.
A)buy; rise; fall
B)sell; fall; fall
C)sell; rise; fall
D)buy; fall; rise

Question

Quizplus · Accepted Answer

When the quantity supplied of money exceeds the quantity demanded, people buy bonds to shed cash. This raises bond prices and causes nominal interest rates to fall.

If the Quantity Supplied of Money Exceeds the Quantity Demanded