-In the above figure, if the interest rate is 4 percent, people
A) sell bonds so as to convert them into money.
B) buy bonds so as to have a better store of value.
C) petition the Fed to tighten the quantity of money.
D) buy stocks, because stocks are more liquid than currency.

Question

-In the above figure, if the interest rate is 4 percent, people
A) sell bonds so as to convert them into money. 
B) buy bonds so as to have a better store of value. 
C) petition the Fed to tighten the quantity of money. 
D) buy stocks, because stocks are more liquid than currency.

Quizplus · Accepted Answer

When the interest rate is 4 percent, people may sell bonds to convert them into money because they expect higher returns from other investments or need liquidity, as the interest rate is relatively low.

-In the Above Figure, If the Interest Rate Is 4