If people attempt to sell bonds because of excess money demand, then the interest rate will:
A) rise.
B) fall.
C) remain unchanged
D) react unpredictably.

Question

Quizplus · Accepted Answer

Excess money demand means there is more demand for money in relation to the supply of money. This will lead to a decrease in the demand for bonds and an increase in the supply of bonds, which in turn will cause bond prices to fall and interest rates to rise.

If People Attempt to Sell Bonds Because of Excess Money